Wednesday, February 25, 2009

The recession's worst may be past

Economist Irwin Kellner says the economy's decline may be slowing:
Although you wouldn't know it from the behavior of the stock market, the economic outlook is turning just a bit less gloomy.

Prosperity may not be just around the corner, but statistical evidence is mounting to suggest that the worst of this recession may soon be past.

And before you inundate me with email alleging that I am out of touch with the real world, let me say right at the top that I am not for one moment saying that the economy has stopped sliding. I am only suggesting that it appears to be contracting at a slower pace.

Clearly, this has nothing whatsoever to do with the stimulus package that the president signed into law last week. ...

If you want a policy to credit, it's monetary policy. The combination of liquidity that the Federal Reserve has pumped into the economy, along with its special lending programs and capital injections into the banks, is largely responsible.
For the full list of reasons why Kellner thinks the worst is past us, read it here.

1 comment:

  1. It's too early to point to the BDI jumping 200% (since its 22-year low in December). We need to see what's driving that. Actual commodities demand or Chinese stimulus?

    His last point about securities on banks' books improving, and that we have the Fed credit lending facilities to thank for it is suspect. Fed tinkering is not a sustainable, natural event.