Robert Reich & Stephen Roach Rejoin Bear Camp: 2010 Relapse Brewing

[cieldumort]

From Robert Reich's Blog
The Great Disconnect Between Stocks and Jobs

How can the stock market hit new highs at the same time unemployment is hitting new highs? Simple. The market is up because corporate earnings are up. Corporate earnings are up because companies are cutting costs. And the biggest single cost they’re cutting is their payrolls.

Comments

[capthek]

That is the funny thing about a recession, companies lay off people so the workers still there tend to have to do their own job plus the persons who was fired and on top of that they all work even harder because they don't want to be the next person fired and thus productivity and profits go up even though consumption has gone down.

It is possible we may go negative in 2010Q1 or even 2010Q2, but I do think next summer and fall will have some solid growth.

[cieldumort]

Hmmm. I see a weak Q1 or Q2 (with the not-weak quarter being OK -- maybe 3% GDP or higher) ... and then a potential nosedive in the second half.

[capthek]

Ah, sounds like a bet

[cieldumort]

Hands are becoming tied politically - and fiscally -

So sure, this is what I think

Without either A)"V"-shaped GDP growth trajectory throughout 2010 (unlikely) and/or B)An all-out war on unemployment (as opposed to an all-out war on the unemployed, as the current lack of attention to them appears to be, no?).. then a crumbling of our feeble 'recovery' could easily slide into another leg down of this depression.