Tentative End of Recession Call

by: The Fundamental Analyst

With the Industrial Production and Capacity Utilization numbers for July showing modest rises I believe we can tentatively call an end to the US recession. I say 'tentatively' because it is preferable to see these coincident indicators rise for a few months in a row to indicate a bottom rather than a head fake. Also payroll declines need to keep getting smaller. However it is normal for payrolls to continue to contract well after the recession has ended.

[click to enlarge charts]

US Industrial Prod Jul09

US Capacity Util Jul09

However this has hardly been a normal recession and thus prior recessions in the post WWII period may not be the most accurate guide. Whilst we have a tentative bottom in the US economy I am still very dubious about a sustained recovery given the headwinds facing the consumer and the continued deleveraging of the household and corporate sectors.