Dr Lacy Hunt: The impending recession

Not the best interviewer but you always get your money’s worth from Dr Lacy Hunt, former chief economist at the Dallas Fed.

The highlights:

  • Dr Hunt warns of a hard landing.
  • Recent GDP gains are led by consumer spending (+4%) but real disposable income declined (-1%). Personal saving depressed at 3.4%, compared to the GFC low of 2.4%.
  • UOM consumer sentiment is below level of previous recessions.
  • A sharp surge in the economy often occurs just before recession.
  • Dollar is too strong for global stability. It will fall as US goes into recession but then stabilize as the impact flows through to rest of the world.
  • Three signs of weakness:
    • Negative net national saving has never occurred before in a period where GDP is rising (economy is weaker than we think).
    • Bank credit is already contracting. This normally only occurs when the economy is already in recession.
    • Inflation is likewise falling before the recession.

Report Shows Gain in Jobs but Growth Still Sluggish – NYTimes.com

The United States economy created a modest number of jobs in October, the Labor Department reported Friday. Employers added 80,000 payroll positions on net, slightly less than what economists had expected. That compares to 158,000 jobs in September, a month when the figure was helped by the return of 45,000 Verizon workers who had been on strike………

The unemployment rate was 9 percent in October, slightly lower than September’s 9.1 percent but little changed from where it has been for the last seven months.

via Report Shows Gain in Jobs but Growth Still Sluggish – NYTimes.com.