When will the Recession End? Part 112 Warning Sign--Rating Agencies cut outlook on US Business

From one analyst's newletter (David Rosenberg) which just came into my email inbox:

In this so called Recovery that governments are try to convince us that we are in.....

 "The rating agencies are now in the process of cutting their outlook — Moody’s did so on 120 companies this quarter compared with only 40 upgrades (according to Bloomberg). Last quarter, S&P cut the outlook for 76 issuers and raised them for 51."

[...]

The Fed has cut its growth forecast twice in the past three months and has sliced its inflation forecast three times. This was not was envisaged when the first round of Quantitaive Easing(QE) (or bailout in everyday language,) was unveiled last year. Normally, the pace of economic activity is accelerating to over a 5% annual rate in the second year of recovery, not slowing down to below 2% — especially with all the monetary, fiscal and bailout stimulus that is in the system.

Here’s the bottom line: if not for the stimulus and the inventory swing, the economy would have actually contracted this year.

[...]

 As for the U.S.A. [economy as a whole], everyone will just have to excuse us, but it is very difficult to get excited about the economic landscape when:

1. Initial jobless claims are stuck at 465k.
2. There is no absolutely no recovery in bank lending (especially to households — there was a big $6.3 billion decline in consumer loans and $21.2 billion slide in real estate credit last week).
3. While there was tremendous excitement last Friday over the “core capex” durable goods orders figure for August, what received short shrift was that total orders were down 1.3% MoM and have now declined in three of the past four months. (But hey, why worry about autos just because it is the largest component?)
4. And of course, the four pieces of survey evidence for how the economy is faring in September as opposed to August have all lined up quite poorly — University of Michigan consumer sentiment, NAHB housing market index, Philly Fed and the NY Empire index.

[...]

Back in 2007, nobody believed that a recession could ensue absent a substantial inversion of the yield curve. Well, as it turned out, it turned out to be a case of welcome to the vagaries of a post-bubble credit collapse. Today, we hear about a ‘soft landing’ yet again and that it is impossible to have a double-dip recession since they have never happened in the past. That is a dangerous assumption to make — just like it was a dangerous assumption to say that home prices cannot go down because they never have in the past.

Walter Derzko