David Rosenberg: This Is ‘Weakest Recovery’ Since WWII

Friday, 20 Apr 2012 11:33 AM

By Forrest Jones

The United States is experiencing its worst recovery since World War II as indicators such as weak jobs data and choppy consumer confidence numbers show the economy remains sluggish and unwilling to take off, says David Rosenberg, chief economist for investment firm Gluskin Sheff.

In March, the economy added a net 120,000 jobs, far less than hoped, while weekly initial jobless claims have repeatedly come in higher than expected.

Consumer confidence figures have both surprised and disappointed, leaving Rosenberg and others concerned that recovery remains choppy and indecisive.

"It's been the weakest recovery in the post-World War II period, and that hasn't changed," says Rosenberg, The Wall Street Journal reports.

Others point out that warm winter weather brought construction jobs online earlier than planned, which inflated January and February jobs data and made the economy look healthier than it really was, especially considering rising jobless claims.

"It adds to concern about backsliding in job creation after faster employment gains earlier in the year," Credit Suisse economist Jonathan Basile writes in a note to clients, the Journal adds.

Meanwhile, economists participating in a CNNMoney survey say the economic recovery will remain sluggish, with the unemployment rate falling only slightly by the end of the year.

The economists believe unemployment will drop to 8 percent by the end of the year, only a small improvement from the current 8.2 percent rate.

The unemployment rate falls when unemployed people stop looking for work, then rises when signs of economic improvement prompt people to re-enter the job market.

It's like "running in place," said Lynn Reaser, chief economist at Point Loma Nazarene University, according to CNNMoney.

U.S. GDP grew just 2.4 percent in the first quarter, compared to 3 percent at the end of 2011. Economists predict the economy will grow just 2.6 percent this year.

"Growth prospects should continue to improve in a 'two-steps forward, one step back' type of fashion over the intermediate-term," said Russell Price, senior economist for Ameriprise Financial, according to CNNMoney.

But other experts tell the Journal that things aren't too bleak.

Retail and auto sales have come in healthy while households continue to pay down debts.

"The whole economy's on better footing," says Paul Dales, an economist for research firm Capital Analytics.

"I just don't think we're going to see a full-on collapse in growth."

The economy started off strong in early 2010 and in early 2011 only to sputter in the second half of those years, and many are bracing for a repeat performance in 2012 possibly due to lofty hopes earlier in the year.

"After a few months of good data, people got more aggressive with their expectations," Ian Shepherdson of High Frequency Economics tells the New York Times.

"The data are having a brief pause, or a consolidation. The consensus forecast had gotten stronger, so it’s easy to overshoot."

David Rosenberg: This Is