Receding Thoughts

There they go again.

As the recession ends, the nattering nabobs of negativism are carping about a double-dip. Sure we’ve got manufacturing expanding at the strongest rate since 2006. Sure we had great second quarter earnings. Sure housing prices appear to have bottomed. But what about consumers? What about sales?

We hear this every time we come out of a recession. The doom-and-gloom set are disappointed that they missed the rebound, so they trash-talk the recovery. I suppose that it’s human nature to worry, but this is ridiculous Yes, revenue growth has been stagnant. Yes, final demand has to increase for the recovery to be self-sustaining. Yes, employment needs stop declining before than can happen. But everything has its season, for gosh sakes! For folks who expected a U-shaped recovery, they sure seem impatient.
This recession has now run its course. Last winter’s sharp, steep inventory liquidation is over. Producers are ramping back up to meet current demand. They’ll call workers back up and those people will have money to spend. When their finances are stable, they’ll start borrowing and buying again. We haven’t seen a permanent change in the American consumer’s psyche.

But it takes time. We didn’t get into this recession overnight. We shouldn’t expect the recovery to appear overnight, either.

Douglas R. Tengdin, CFA
Chief Investment Officer
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