Econintersect is not a fan of using equities markets to forecast the economy. However, an exception is made for its use as a recession indicator. Today, the S&P 500 closed at 1129 marginally lower than its level on 24 September 2010 of 1148.
The S & P closed down 3.19% on the day, is down 6.58% in the last five trading sessions, down 10.18% in 2011, and down 0.42% in the last year.
Although hard to believe, there have only been five groupings of penetrations below zero growth of the S&P 500 year-over-year since 1990. Score = 3 recessions, 2 false alarms, and one “wait-and-see”.
Previously, Econintersect raised a recession flag for imports which are contracting year-over-year.
Another author picked up on your article: Is This Another 2008 Or 2009? by Jeff Miller
http://seekingalpha.com/article/295468-is-this-another-2008-or-2009?source=email_authors_alerts
After reading Mr. Miller’s article I am not so sure he got the point of Mr. Hansen’s article. He wrote, “has chosen to include the stock market as a recession signal.” And then goes on to say, “I hope that my astute readership will be unimpressed by this marginal indicator on a handful of cases.”.
If anything, I am unimpressed with Mr. Miller.
Interesting chart and another one MANY points of interest in reading the tea leaves.
Thanks.
Gary – – –
Thanks for your comment. We have posted Jeff Miller’s article here – we like a good debate. See http://econintersect.com/b2evolution/blog3.php/2011/09/24/what-is-the-right-analogy-2008-or-2009
John Lounsbury