Uh-Oh IV

From September 2011 issue of Currency Capitalist:

Wrong Again, Economists

"Every month the Wall Street Journal publishes a survey of economists. In January, the headline read 'Economists Optimistic On Growth.'

At the time economists were optimistic. They expected the U.S. economy to grow by a respectable 3.3% in the second quarter.

But they were wrong. The U.S. GDP came in at 1.3% for the second quarter, less than half that. And this is just the initial estimate that will be revised later.

Export figures for the second quarter were recently revised lower. Since exports play a key role in GDP growth, this revision in exports will result in a lower GDP number for the second quarter.

So when the revised second quarter GDP numbers come out in late August (after we go to press), I expect to see another pathetic number.

The GDP number for the first quarter was already revised down from 1.9% to an anemic 0.4%. That’s a huge revision. If the second quarter suffers a revision of the same magnitude, we will dip into negative growth.

Again, these economists are looking at the same data that I am, but they’re still optimistic. In fact, as recent as three months ago, economists still expected the U.S. economy to grow by more than 3% this year.

Economists at Goldman Sachs still maintain to this day that the chance of another recession is only 33% in the next nine months.

Unfortunately, history doesn’t agree.

Right now, our year-over-year GDP growth stands at a very concerning 1.6%. If you go back all the way to 1950, you’ll see that every time our GDP growth dropped below 2%, our economy was either already in a recession…or we fell into one within a year.

In other words, history is already predicting another recession. Just nobody wants to come out and say it. "