Lakshman Achuthan has someone to take the other side of his recession bet. Unfortunately for him, it’s no lightweight. One of the global economy’s best barometer’s of growth is now saying there will be no recession (despite their recent dip in earnings and cautious outlook). CNBC reports:
“We don’t see a contraction; we don’t see a recession,” FedEx’s Smith said at a meeting in Columbus, Ohio, where General Electric unveiled research on midsized companies.
“It’s steady as you go, slow growth,” Smith said. “Not contraction.”
I still think the whole double dip debate misses the point and takes the focus off of the true cause of this recession. We have been in a classic balance sheet recession this entire time. There was no recovery. There was only massive government stimulus that papered over the weakness in the consumer who has been de-leveraging. The key from here will be understanding the impact of any potential deficit reduction between now and 2013 (when I believe the BSR could be over) and also keeping an eye on exogenous shocks as they could turn slow growth into negative growth.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.