It’s Always in the Last Place You Look

Writing at Bloomberg Mark Whitehouse says he has searched everywhere and can’t find signs of a recession:

Nonetheless, with due humility, it’s worth trying to gain some insight by comparing what’s happening now to what has happened at the beginning of other recessions. To that end, consider six indicators that cover at least some of the period since the stock market plummeted in early January: consumer spending, job openings, new unemployment claims, new manufacturing orders, orders for capital goods and building permits.

In the first three months of the last five recessions, on average, all these indicators pointed toward trouble. By contrast, during the three months through January (and through most of February for unemployment claims), they look largely positive. The number of people filing for jobless benefits is up a bit, but not much. Capital goods orders could be better, but they’re not falling in inflation-adjusted terms. The stock market is the only indicator that is decidedly pointing down.

I’d like to suggest that he’s looking at the wrong end of historic recessions. Rather than looking at the front end he should be looking at the middle or the tail.

More than 90% of U. S. counties haven’t recovered from the Great Recession. As you can see from the map in the WSJ post to which I linked, most of those that have fall into one or more of the following classifications:

• they’re experiencing a recovery based on oil
• they contain a state or federal capitol or are adjacent to one
• they’re seeing a lot of foreign money spent on real estate

When you’ve never recovered any slowing of growth is bound to feel like a recession.