John Hussman of the Hussman Funds notes in his weekly market commentary that all of the economic growth in this recovery has been fueled by the government's deficit spending. Hussman notes:
...if one removes the impact of deficit spending, "the economy has recovered to the point where the year-over-year growth rate since early 2009 now matches the worst performance of any of the 50 years preceding the recent downturn." In effect, Wall Street's is seeing "legs" where the economy is in fact walking on nothing but crutches.
Hussman's comment cites four variables he evaluates to determine whether we are in a recession or not. An update on the readings for these variables can be read in his weekly comment on the Hussman Funds website.
He does conclude, "From my perspective, the evidence isn't yet sufficient, from a probability standpoint, to firmly anticipate a double dip. But it is notable how close the evidence is to locking in on that conclusion."
Born on Third Base
by: John Hussman
June 14, 2010