With all the bottom calls and talk of “Green Shoots” one might think that the events of 2008 were all just a brief nightmare.Certainly many on Wall Street seem convinced that the trend has changed… the “panic” is over and now we have to simply look forward to the typical trend of a Bull Market and wider economic recovery.
Yet, this view is almost entirely founded on analysis of past recessionary patterns and the assumption that today’s decline will follow suit.
It’s different this time… or actually I should say… it WAS different THIS time…
As I have argued before, I think the view that “recovery is around the corner” is shortsighted and further presupposes that the “recovery” that supposedly occurred in the wake of the “dot-com” bust was truly a recovery and not simply an economy wide distortion fueled by the late stages of the massive housing and credit binge.
Ill remind readers again that today we have lower nominal (and much lower real) stock market values and lower employment level (and much lower ratio of population employed) than 9 years ago.
This is significant.
Without the firm belief that the 2002 – 2007 period brought actual recovery you are left to only conclude that we have been caught in an economic shakeout the likes of which have not been seen in the post-WWII era.
One notable data point worthy of reflecting on are today’s purchase applications and reported average interest rates (click for larger) … notice that even with all the Feds “quantitative easing” home purchase activity continues to decline.
Historically low mortgage rates (and tax freebies) are being met with a persistent decline of enthusiasm for home purchasing… not a sign of recovery.
