It's not looking good. The best the perma-bulls can come up with is another Fed rate cut and some truly moronic garbage about a "W-shaped rally" that will naturally solve America's problems by the end of the year.
Now that the US consumer has finally hit the wall, there’s growing speculation the Federal Reserve will push its interest rate pedal to the floor.Funny. I don't see the housing market hitting bottom until 2010 at least. That means we could be in for a multi-year recession or something worse if these money market numbers don't resolve themselves very shortly. They're still locked up tight.September’s 1.2 percent decline in retail sales and downward revisions in the two previous months virtually assure the first quarterly decline in consumer spending in 17 years. That's something economists have been worrying about for some time, when it appeared the government’s fiscal stimulus package was having a limited effect.
“I've said since the summer that a ‘dark period’ of economic data lie ahead,” Miller & Tabak’s chief bond market analyst Tony Crescenzi told clients in a note.
Crescenzi is among the many economy watchers who now expect the government’s GDP data to show the economy contracted in the third-quarter. Economists expect that contraction to continue through the fourth quarter and into the first quarter of next year, which also bodes poorly for holiday sales.
“Housing has to bottom first,” says economist David Jones of DMJ Advisors. “So the recession doesn't end until March 2009 at the earliest, maybe even June 2009 at the latest.”
What form will next week's "rescue package" take, I wonder?
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