Tags: Flash | Recessions | US | Economy

RBC's Porcelli: 'Flash' Recessions Striking US Economy

Tuesday, 11 Oct 2011 08:16 AM

The U.S. is economy is in such sluggish shape and subject to jumps and stalls that the country is susceptible to so-called "flash" recessions, says Tom Porcelli, the chief U.S. economist at RBC Capital Markets.

A recession is typically defined as two consecutive quarters of economic contraction.

Today, however, the economy can plummet one month and shoot up another, meaning the old definition might not reflect a new reality.
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"In August we went through a recession. You had effectively zero job growth and you had virtually no consumer spending. That's a recession. It will never meet the traditional definition put out by the National Bureau of Economic Research, but we would argue that was something of a recession," Porcelli tells Yahoo Finance.

"We believe the current sentiment‚Äźdriven backdrop will be prone to fits and starts where economic activity could come to a near standstill one month, followed by a modest bounce back the next month." Porcelli adds.

"Call it a flash recession. Call it whatever you want."

The economy added 103,000 jobs in September, which allayed fears the country is falling back into a recession although most agree clouds remain on the horizon.

"It underscores the belief that the economy has skirted a recession, but that's not to say it's out of the danger zone because there are significant risks out there," says Millan Mulraine, senior macro strategist at TD Securities in New York, according to Reuters.

Even those in President Barack Obama's own camp say the economy is growing too slowly.

"I would not say that we are satisfied in the slightest," National Economic Council Director Gene Sperling tells Reuters.

"There still is a risk that this economy could stall out or even have a double-dip recession."

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The U.S. is economy is in such sluggish shape and subject to jumps and stalls that the country is susceptible to so-called flash recessions, says Tom Porcelli, the chief U.S. economist at RBC Capital Markets. A recession is typically defined as two consecutive quarters...
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Tuesday, 11 Oct 2011 08:16 AM
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