Monday, October 18, 2010

This feels like 1937 again. The Potential Obama Recession of 2011

The verdict is in. The variables that lead to a recession are in motion. The hours of employees in the durable goods industries have shrank since July of 2010. Likewise, the number of people working in manufacturing has been declining since then. These are among the first indicators of a coming recession. There are others and I will keep you posted.



One thing is likely. Once corporate profits drop, the economy will sink into recession relatively quickly. In the prediction that I made in September of 2006, I figured the recession wouldn't hit until late in 2007 or early 2008. That's because the longer the boom, even one as weak as the United States suffered under President Bush and the Republican congress, the longer the lag period that leads us into recession.



If the variables continue to unfold, all of which are provided in my book, The Rigged Game: Corporate America and a People Betrayed, then the lag period should be short. Most likely the recession will unfold rapidly. So if corporate profits drop in this quarter, we should be in recession sometime in 2011. But it all depends of when corporate profits drop.