Stay of Execution?

So recession probabilities have ticked up, but it’s not too late to avoid it, right?  Some major strategists are out with improved economic outlooks this morning…

From Bloomberg:

A string of stronger-than-projected statistics — capped by the news on Oct. 7 of a 103,000 rise in payrolls last month — has prompted economists at Goldman Sachs Group Inc. and Macroeconomic Advisers LLC to raise their growth forecasts for third quarter growth to 2.5 percent from about 2 percent. That’s nearly double the second quarter’s 1.3 percent rate and would be the fastest growth in a year.

“The U.S. economy doesn’t look like it’s double-dipping at all,” said Allen Sinai, president of Decision Economics Inc. in New York. “But it is a crummy recovery.”

That recovery still faces what economist Chris Rupkey in New York calls “a lot of headwinds.” These range from the sovereign-debt crisis in the euro zone — and increasing likelihood of a recession there — to political gridlock in the U.S. over the budget.

“We can skirt a recession,” said Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. “But if headlines worsen in Europe and cause a major stock-market rout, it could lead to a loss of confidence here on the part of businesses and consumers and make forecasts for a recession a reality.”

As bad as things have seemed this summer/fall, it is important to recognize that we’re not headed to a recession so long as there is no “trigger”, the concern is that a China or Euro shock could serve is that trigger which is why we’re paying such close attention after all.


No Recession for U.S. as Forecasts Improve (Bloomberg)