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Hussman: Second Recession Will Be Declared Soon

Wednesday, 29 Sep 2010 09:00 AM

Economist John Hussman says the National Bureau of Economic Research will have to declare another recession soon.

Commenting on a recent report from the Business Cycle Dating Committee of the National Bureau of Economic Research that said the recession that began in December 2007 is over, Hussman noted that, “the committee decided that any future downturn of the economy would be a new recession and not a continuation of the recession that began in December 2007."

“The Committee took pains to make it clear that it was not forecasting the future or suggesting that economic progress has even been very good,” Hussman wrote in a recent note to investors.

He said the bulk of the growth coming off of the June 2009 economic low “was driven by a burst of stimulus spending coupled with a variety of programs to pull economic activity forward.”

He said that “to most Americans, it is not at all clear that the economy is in an expansion at all … a review of that data suggests that the NBER may have to deal with the prospect of a ‘future downturn of the economy’ much sooner than any of us would like.”

The average time between contractions might fall back toward its long-term average of about every four years compared with about eight years during the past two decades, Robert C. Doll, chief equity strategist for BlackRock, told Bloomberg Business Week.

“The cyclical recovery is under way now, but more recessions are down the line,” says Doll, who is buying U.S. stocks because he doubts the economy will relapse in the immediate future, and is betting returns in the next decade will fall short of their traditional average 12 percent.

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Economist John Hussman says the National Bureau of Economic Research will have to declare another recession soon. Commenting on a recent report from the Business Cycle Dating Committee of the National Bureau of Economic Research that said the recession that began in...
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