Greenshoots or False Spring?Posted: April 6, 2009 Filed under: Equity Markets, Festivities, Global Financial Crisis, U.S. Economy | Tags: altman, bernanke, cowen, Depression, greenshoot, recession, recovery, thoma Comments Off on Greenshoots or False Spring?
I woke up this morning to a chill in the air. When I came back home from university today it was a chilly 60 in the house. There’s a frost warning for the North Shore and I had to put the heater back on and pull at the flannels. I walked the dog in a fleece jacket and had to put socks on. This weekend was just warm, sunny, and great and the Strawberry Festival was in full swing? WTF happened here in Southeastern Louisiana? One day I’m basking in the first hint of a warm sun enjoying fresh strawberry shortcake and the next I’m hoping that the magnolia blossoms are safe. Yes, there’s a Strawberry Queen, a Strawberry Ball, and Strawberry Royalty. If you gotta work somewhere, it might as well be the Strawberry Capitol of the Word.
So, having been raised in the Great Flyover and spent most of my childhood watching my Dad’s business sell F-150s to the local farmers, I know a lot about a false spring. That’s when Mother Nature messes with you by giving you just enough spring to think the worst of winter is over and then hits you with the cold blast of reality. Thankfully, my cold blast didn’t include the blizzard that hit the heartland, but it is a cold blast. That’s why I’m having so much fun with the economic word-de-jour. That would be Ben Bernanke’s “green shoots”. An Ivy-leaguer from South Carolina should know about about false springs. Bloomberg picks at the analogy too in Bernanke ‘Green Shoots’ May Signal False Spring Amid Job Losses.
April 6 (Bloomberg) — It will be months before it’s clear whether what Federal Reserve Chairman Ben S. Bernanke calls the U.S. economy’s “green shoots” represent the early onset of recovery, or a false spring.
The Labor Department’s April 3 report that the economy shed an additional 663,000 jobs last month, while the unemployment rate rose to 8.5 percent, will be followed by months more of bad-news headlines, economists say. The recession, now in its 17th month, has already cost 5.1 million Americans their jobs, the worst drop in the postwar era; unemployment may hit 9.4 percent this year, according to the median estimate in a Bloomberg News survey, and may top out above 10 percent in 2010.
The risk is that the jobs picture turns even more bleak than forecast or the drumbeat of bad news still to come causes consumers, whose spending has firmed up in recent months, to hunker down again.
“If something happens to spook consumers and they crawl back into their tortoise shells, that would be terrible news,” says Alan Blinder, former Fed vice chairman and now an economics professor at Princeton University.
Consumer spending, which accounts for more than 70 percent of the economy, rose 0.2 percent in February after climbing 1 percent in January, breaking a six-month string of declines.