Tags: Hussman | US | Recession | economy

Hussman: US Has Already Plunged Into Recession

Monday, 25 Jun 2012 09:00 AM

Economist and fund manager John Hussman says that, contrary to prevailing opinion, the United States has already entered a recession.

"Economic data such as GDP and employment data are heavily revised over time," Hussman writes in a note to investors. "Very often, the first real-time negative GDP print occurs about two quarters after the recession actually begins."

It is only later that the data are revised to show an earlier downturn, says Hussman.

Editor's Note: The Final Turning Predicted for America. See Proof.

"For that reason, it's important to pay attention to the joint action of numerous economic data points, rather than selecting any specific indicator as an 'acid test,'" he says. "The joint evidence suggests that the U.S. economy has entered a recession that will later be marked as having started here and now."

Hussman says the weakness developing in the most leading components of U.S. data closely reflects what we're already seeing in European data, which definitely isn’t good.

“The only real chance for Eurobonds, ECB money printing, or other joint sharing of liabilities among European countries — at least any plan that would involve Germany — would require European nations to hand over control of their fiscal policies to a central European authority,” Hussman says.

“That's not impossible, but it seems that conditions would have to be near-catastrophic for individual countries with very diverse national identities to surrender that much sovereignty. Alternatively, conditions would have to be near-catastrophic for Germany to capitulate and provide endless bailouts to peripheral Europe without this control.”

Bloomberg reports that the euro area faces a major economic crisis, most likely a series of rolling, country-specific problems involving some combination of failing banks and sovereigns that can’t pay their debts in full.

Editor's Note: The Final Turning Predicted for America. See Proof.


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Monday, 25 Jun 2012 09:00 AM
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