Ever since the 2001 recession was called too soon, I have wondered about the National Bureau of Economic Research (NBER) and its method for calling the end to recessions. I'm not sure if they tweaked their parameters and inputs, but something isn't right, and I think it creates more harm than good.
Eight post Great Depression recessions saw unemployment peak on average 1.5 months after the recession ended. It would stand to reason the main component for figuring out the end of recession would be employment. But, something odd has happened, and I think it's politically motivated.
Maybe it's because our office was within a few blocks from the World Trade Center and New York was still in mourning, but it didn't feel like we were out of a recession back in 2001. The stock market meltdown was in full affect, and there was a palpable malaise. So, now all of the talk of a double-dip recession seems a little off when, in fact, I doubt we ever came out of the recession back in June 2009. While these early timestamps help presidents, it doesn't help the economy where a false sense of relief takes away natural reactions that might otherwise be in place. Sure, regular people know the deal and most didn't buy into the hype.
The last three recessions were called over more than 12 months before unemployment peaked. Something is terribly wrong...with the timestamps and possible motivations. However, saying the coast was clear opened up the ability to launch a more devastating war on business and their profits. Yesterday's economic data should send a message to those with the power to make it better that it's too early to pick the fruits of a tree that is dying, not growing.
We need a miracle on Friday on the jobs numbers, and then we need to get real about where the nation is and unleash its greatness. I can tell you right now people are not coming out of their foxholes despite what the NBER or the White House tells them.
Going Granular on a Handbag Maker's Earnings Report
By: Brian Sozzi, Equity Research Analyst
For the second consecutive quarterly earnings release, the market looks prepared to sell the news on Coach (NYSE:COH). At first glance, Coach had a solid quarter of top and bottom line growth in a North America retail environment best characterized as volatile. Keep in mind that Coach is not a traditional luxury goods play, distributing lower priced/quality (Poppy) handbags and accessories to department stores in North America and having a factory distribution channel (anyone ever visit the Gucci outlet?). So it's plausible that with the renewed weakness in consumer spending evidenced in 1Q, Coach's goods would not necessarily be a top of mind purchase for a head of household of a middle income family, which is dealing with higher food, gas, and back to school bills. Although Coach's China story remained nicely intact in the quarter (double-digit percentage comp growth), we think there was consumer related stress on the North American business…one just had to engage in a game of puzzle building to find it.
e are going to keep our powder dry this morning.