The Recession Is Over!

We had Schwab strategist Liz Ann Sonders on TechTicker yesterday.  Refreshingly, Liz thinks the recession is over.  She also thinks, unfortunately, that we may be headed for a double-dip.

Aaron Task: While most are debating whether the “green shoots” are real or just weeds, Liz Ann Sonders is declaring the recession over.

Yes, Charles Schwab’s chief investment strategist says the recession has ended, and believes second quarter GDP could be marginally positive.

Improvements in the components of the index of leading economic indicators, as well as new orders in the ISM data, and other technical indicators provide the basis for Sonders’ call.

“We look backed in history when recessions have ended and it looks very similar to the environment we’re in now,” she says. “You have to go through ‘less bad’ on your way from ‘less bad’ to ‘good.'”

Two things worth noting as you pick your jaws up off the floor:

  • Sonders said the recession started in late 2007 long before it was obvious to most observers, and well before the NBER’s “official” declaration.
  • Saying “the recession is over” does not mean Sonders is a wild-eyed optimist or believe the economy’s problems are all behind it. Furthermore, there’s a “reasonable risk” of a double-dip recession, she says.

There’s more detail on Sonders’ contrarian view in the accompanying video, as well as her take on what it means for the market, which — prior to the past two days, at least — clearly has “priced in” a recovery in the sooner vs. later timeframe.

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