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StockBlade VS Briefing.com and May 6th Revisted

July 3, 2008 11:45 PM

business-sunset.jpgOn May 6th I basically went head to head with Dick Green, President of Briefing.com, when I reviewed their opinion of the economy. He wrote an article that was titled “The Recession That Never Was”. It basically said that we are not going into recession, people were over estimating everything from housing to oil to inflation to jobs, etc. etc. etc. I basically started my review of their economic opinion by saying Dead Wrong. That should have made my opinion rather clear.

In that post, I went on to say that he is dead wrong because he did not understand what the true problem was, this is not a cyclical downturn, it is a fundamental downturn, which is far worse and can last far longer. The problem is we have never really experienced a fundamental downturn in the U.S. economy, IMO, since the 30’s. All other downturns were cyclical. The fundamentals were in place for an economic recovery once inventory was cleared, etc. That is no longer the case. It is fundamental because of declining real incomes and debt levels that cannot be supported by those declining incomes.

I suspect based upon that belief that people are overly pessimistic on the economy (he would likely consider me a doomsdayer) their opinions on economic figures have been far too optimistic. For example, let’s look at today’s numbers, all of which were not only above consensus figures, but way above reality.

Unemployment Rate: 5.5% Briefing 5.4%

Nonfarm payrolls: -62,000 Briefing -50,000

Initial Claims: 404,000 Briefing 375,000

ISM Services: 48.2 Briefing 52.0

To be fair to Briefing.com the consensus estimates were ALL too high, they were just higher. On the other side, I have been saying that the economists are wrong, analysts are wrong, Briefing is wrong, Paulson was wrong, Kudlow is wrong, everyone not named Peter Schiff was wrong, basically. The economy was going to get far worse than people realized and last far longer than people expect. Then, many months after I had been screaming from the top of the mountain Buffett began saying the same thing.

Today’s numbers have unfortunately once again proven me correct.

Written by Tom@StockBlade.com · Filed Under Current Market View 

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