GDP is In, and Recession is Out … or is it?

The Great Recession

Having predicted last year that a recession would begin in the summer of 2019 and that it would likely start with a major repo crisis, I am now proven wrong by 2019’s fourth-quarter GDP. If the repo crisis that started in the final week of summer had actually been the start of a recession, we would have seen fourth-quarter GDP go negative. Instead, it came in at 2.1% growth. 

I find that an interesting number because third-quarter GDP also came in at 2.1% growth, and second-quarter GDP came in at 2.0% growth. Now fourth-quarter GDP came in exactly at 2.1% growth. Coincidence or goal-seeking? Notice the numbers are “seasonally adjusted,” and think about how many assumptions are made in seasonal adjustments.

All of this year’s quarterly year-on-year readings average out to 2.3% growth over the full year, which is worse than 2018’s average of 2.9%. That means the massive Trump Tax Cuts and spending increases have netted us a worse economy, year-after-year; or you can blame that on the trade wars or the Fed or all of the above (as I would). In the very least, we certainly have not seen any improvement due to the tax cuts.

So, I was wrong in my ambitious 2019 prediction of a recession starting in the summer. I knew I was out on a limb compared to what anyone else was saying, and I was wrong.

Read the rest here:

Start the Conversation

Your email address will not be published.