Is the recession over or was there ever a recession?
The US stock markets had an amazing day yesterday. Each of the major indexes was up over 3%. It looks like today will follow through on that bullish action. This begs the question: Is the recession over? The better question to ask is: Was there even a recession in the first place?
A recession is defined as 2 consecutive quarters of negative GDP growth. Q4 2007 showed a slightly positive growth rate of 0.6%, so that quarter does not qualify to be evidence of recession. We’ll soon hear estimates on the Q1 2008 GDP which are poised to be slightly negative, however my guess is Q1 will be flat. Q2 2008 will show us back in positive territory.
My guess is the media will still try to play this as a recession, despite the fact that it is not. What this means to me, and hopefully you as well, is that we have a tremendous bargain shopping opportunity on Wall Street. Stocks are beaten down for what amounts to nothing more than panic. There is still much downside in real estate but there are plenty of other sectors with much positive news. Tech, retailers, mining and minerals, and energy would all seem like fine plays in today’s market.
Don’t let the news get you down, things are looking bright!
