David Rosenberg: 'If You Don't Believe In A Double Dip, It's Because The First Recession Never Ended'

What if the recession never actually ended?

That's the gloomy picture Gluskin Sheff economist and former Merrill Lynch economist David Rosenberg painted in a recent interview with the Wall Street Journal. "If you don't believe in a double dip, it's because the first recession never ended," he said.

Rosenberg argued that the recent GDP rebound in the last two quarters was not a recovery at all, but temporary growth lead by rising inventories and government stimulus. The odds of a double-dip recession, he suggested, are "higher than 50-50."

Now, "the inventory cycle is behind us and the policy stimulus by and large has also peaked out," says Rosenberg.

Although the range of possible economic outcomes for the next few quarters is wider than he's ever seen in his career, Rosenberg isn't sure whether the all-important American consumer can carry the economy.

Here's more from Rosenberg:

"I don't see what the underpinnings are for the economy are. When I take right now a look at the numbers, we're looking at third quarter growth close to zero. It looks like second quarter is going to get revised from 2.4 down to as low as one or 1.5. I'm thinking flat for the third quarter -- I mean there's no growth in consumer spending and that's 70 percent of GDP ... This will be the big surprise: I think there is a significant chance in the fourth quarter that the economy could be contracting again."

Check out Rosenberg's full interview below:

Comments

[jgervin]

12:40 AM on 08/25/2010

Wrote about this back in 2009 finally someone agrees. http://bit.ly/5CGZg

[sonnybrakes]

08:55 AM on 08/19/2010

...and in this corner weekly jobless claims hit 500,000....

[shantanum78]

11:05 PM on 08/18/2010

So finally, someone says what's been common knowledge all along. I guess people blindly following the market are a bit peeved.

Perhaps some of the sanctimonious finger wagging about people not trying hard enough for a job will be toned down a bit.

[lvdragonlady]

10:04 PM on 08/18/2010

People like you need to stop talking and just watch, because the constant attention could make it happen when it otherwise would not have happened.
Loose lips sink ships............think about it.

[lizjoycee]

04:13 PM on 08/18/2010

Bob Doll still thinks we're headed for recovery:

http://www.wallstmemo.com/news/2010/8/17/guru-insight-blackrocks-positive-outlook-holds-strong.html

[IWantAJob]

03:11 PM on 08/18/2010

There has been a recovery, but only for the major corporations, not the workers of the US. the massive transfer of wealth continues.
1. Workers will pay more for their health care next year as U.S. companies prepare for provisions of the overhaul signed into law. The health bill provides for 31 million more customers for the health insurers. WellPoint (Blue Cross) posted a 727.3% gain on its bottom line during the fourth quarter, as net profits jumped to $2.74 billion from $331.4 million in the year-ago period.
2. Fortune has released its most recent list of the world's most profitable companies and BP has placed fourth, pulling in a whopping $16.56 billion in profits in 2009.
3. Goldman Sachs, which is now accused by government regulators of defrauding investors, nearly doubled its income in the first quarter to nearly $3.5 billion
How many billions in profits do they need before they create/keep jobs in the US?

[hellboundtrain]

05:44 AM on 08/17/2010

There is no recovery as long as there is no grand expansion of manufacturing. The policies must be set that would allow this to happen, otherwise recovery is a cloud in the wind.

[HopeR]

02:49 AM on 08/17/2010

How is this for ridiculous! I get laid off, I go to the Job Resource Center. The counselor I go to see tells me that there is a recovery. I ask her where the jobs are, well she can't really be specific.

[IWantAJob]

03:14 PM on 08/18/2010

Here in SoCal, the Employment Development dept has outsourced their career centers to a company named Arbor,whoever they are. They are offering training in jobs that don't exist in the US. Like medical coding. Or low paying jobs such as nail technician - $8 an hour. It's only a matter of time before the gov't pays our relocation costs to India to apply for jobs there.

[Ken Dost]

01:03 AM on 08/17/2010

Amen to that brother.....except this recession is headed straight for a depression and God willing a revolution against the banking systems that brought us to this point

[Tim in Tucson]

02:02 AM on 08/17/2010

Fanned and faved.

[ThePeoplesKey]

12:33 AM on 08/17/2010

Michigan is still trying to recover from the recession of 2000. Our legislature has decided that we're not going to attempt to recover from the recession of 2007-? until we recover from the 2000 recession so I hope the recovery comes soon . . .

[KCFreedom]

12:32 AM on 08/17/2010

Actually I believe the recession of 2001 never ended. All the alleged growth during the Bu$h years was plundered by the richest 5% but the rest of us got nothing except if lucky to have sold real estate on the way up and got out before the bottom fell out.

All my 401k and IRAs are worth half of what they should be over the same period.

[xilduq]

11:17 PM on 08/16/2010

the 2007 recession never did end. heII, even the nber hasn't called an end to it. it's amazing how, when you lose your job but you continue your lifestyle on credit, it can look like you're doing fine, short term, until your credit is maxed out.

[Lenny666]

10:54 PM on 08/16/2010

The recovery is an elaborate lie intended to prop up consumer confidence. Confidence is essential to a "con" game.

[LCM1220]

10:53 PM on 08/16/2010

Finally!!!!! Someone who see's the really BIG, UGLY PICTURE...Sorry folks...this guy is dead right.

Batten down the financial hatches!!

[MrOctober]

10:35 PM on 08/16/2010

Just wait for next year, when the term "Triple Dip Recession" comes into being. The fact that is, it will be called a depression when historians finally look at the facts 20 or 30 years from now.