The upwardly revised Q1 GDP to a 0.9% gain, on top of the 0.6% Q4 2007 gain, will make it difficult for the National Bureau of Economic Research to officially label this as a recession. However, with payrolls dropping for five consecutive months, higher unemployment, business investment weak, lower home sales and prices, global inflation creeping in, increasing food prices and shortages, on top of $134 oil, it should be easy for anyone who isn’t an economist to call it a recession. And that is why the consumer has pulled back.
The stimulus checks are like giving one last fix to a junkie. They’re happy and spending for now, at least according to this mornings 1.3% gain in the May retail numbers, but who is going to give them their next fix? Can you say deficit spending or tax increase? How about, have no fear, congress is here?