German Recession May Have Ended in Second QuarterPosted: July 9, 2009
This is a ‘may have’, but it is still good news for the Euro region. What happened? The US economy was supposed to be first in first out.
We are seeing the number of newly unemployed being cut as most companies have made extensive layoffs in the first half. If we see a turn the second half should not see massive layoffs. We are waiting for Q2 results from a number indicative companies… some have already posted better than expected results. There is talk of a second stimulus (which in my opinion is not needed and would be a waste). We should see some effects of the Recovery Act stimulus funds in the 2HFY09.
The Q2 results are pivotal for the stock market. Will we see a second dip as I fear? If the results are good and outlook projections positive, then we should be past a double dip, but this also requires consumers to spend as well in the fall.
The problem is still massive unemployment and the spiraling loss of home equity. These are making people save rather than spend and without the consumer purchasing engine in high gear we will not grow. As schools start in August we should see a spike in retail spending. Additionally we are starting to move into the fall Christmas sales season.
Timing… we must also consider the impact of returning troops from Iraq and what that will do to unemployment.