In a strange way this article from Marketwatch is confirming, but also unsettling. I’ve been writing about the recession call by ECRI for months now and now along comes John Hussman saying the same thing to his clients:
Money manager John Hussman, chairman of Hussman Funds, is among those who think it is. “We continue to believe that the U.S. economy joined a global economic downturn during the third quarter of the year,” he wrote to investors recently.
He notes that most of the forward-looking indicators, including “industrial production, capacity utilization, real disposable income, real personal consumption, real sales, retail and food service sales, and real manufacturing and trades sales” are all pointing down.
Then the writer acknowledges ECRI‘s call that the recession started back in July:
The Economic Cycle Research Institute agrees, and recently announced that a recession may have begun as long ago as July. The combined economic signal coming from industrial production and personal income, noted ECRI in a recent report, “has never occurred outside a recessionary context in over half a century – but it’s occurred in every recession.”
And preliminary data on Christmas spending comes from none other than MasterCard. If they don’t know what’s happening in the malls, no one does:
MasterCard reports that holiday spending was up just 0.7% this year, a fraction of the 4.1% predicted by the National Retail Federation. MasterCard’s report, based on spending on its cards, is only the first on the topic and it is not the final word, but it is ominous.
Investors have been wary of retail stocks ever since Thanksgiving:
No wonder retail stocks on Wall Street are rolling over. Stocks like Target and Macy’s have fallen about 10% since the week before Thanksgiving. Tiffany & Co. has lost 15% since the start of November.
There is a lag between calls like ECRI’s and the realization by the rest of us that, yup, it really is happening. He refers obliquely to the post-Christmas discount sales index: walk the malls today and see 1) how many people are shopping for deals, and 2) how much the prices have been marked down. Some retailers, perhaps most of them, loaded up on inventory on the bet that shoppers this year were going to spend like crazy. Now they’re in the download mode: cutting prices to get rid of stuff they couldn’t sell earlier.
As I say, it’s unnerving to see someone else see the same thing that I’ve been writing on for months. And notice please that I haven’t said a thing here about “fiscal cliff” or “debt ceiling.”