Take a Dip

Gil Standard took the kids up to Virgil’s for a day of fishing out on Evergreen Lake a couple of Saturday’s ago.  After a morning spent catching innumerable blue gill too small to keep, one pan-sized crappie, and a hit by something Virgil swore was “a big pike, maybe a muskie,” Gil nosed their boat up to the shoreline so they could lay out lunch in the noontime shade.  That’s when a situation began to develop.  Young Jimmy jumped out, turned and gave the craft a vigorous tug to moor it firmly upon the bank just as Gil stood to tilt the outboard up where it wouldn’t drag on the bottom.  The inevitable result placed him in the lake to Jimmy’s horror.  Virgil observed somewhat dryly, “The problem was you had yer feet movin’ one way and yer head in t’other  and that’s generally a sure-fire way to get wet.”  He made a sucking sound through his teeth, then continued.  “Nothing to be ashamed of though.  Heck, I’ve fallen into just about every lake in this state at least once’t.”

Such a dilemma is not relegated just to fishing.  While financial markets are forward-looking, economists are looking back.  Markets tend to price their components by constantly discounting future events, both positive and negative, thereby arriving at a dynamic consensus which can change minute by minute.  Economic analysis, while capable of making predictions, does so by relying on recent data which becomes dated just by the mechanics of assembly.  Thus by necessity we use last month’s sales, last quarter’s GDP, even summaries that date back by a year or more to determine just where our economy is situated in its ongoing cycle of boom and bust.

These days there is much discussion about the possibility of a “double-dip” or the chance the U.S. will once again enter a recession.  Some folks will ask, legitimately, when we ever got out of the last one but the official arbiters of such things assure us this is a recovery.  With the year’s first quarter GDP at +0.4% followed by an anemic +1.0% in Q2, I suppose we can’t quibble.  Any growth, no matter how slow, isn’t contraction, and that’s the basis for declaring recessions.  Of course those numbers are always subject to revision, but we hardly need such a report to convince us that times are tough.  Besides, looking back as they must do, economists point out that nine of the last 11 recessions were preceded by periods showing 1% or less growth.  That makes the odds favoring a second soaking hard to fight.  Perhaps that’s why so many of our indicators here at Atlas are pointing south.