Trader Talk

Did Market Ride NBER 'Recession' Report?


Did the NBER announcement help the stock market this morning?

Lost in all the commentary around the president's Town Hall appearance on CNBC was the NBER's* pronouncement that the recession officially ended in June 2009.

While most point to a strong technical move as the primary mover this morning (the market moved when the S&P 500 passed Friday's high of 1131 to break out of its trading range to a 4-month high), the NBER announcement, which came out at 10:23am ET — as the market was heading up — may have been a help.

Birinyi Associates noted that now that the expansion is "officially" 14 months old, some comparisons to past recessions are in order. He looks at where we were were at 7 other recessions going back to 1961, compared to the recession we have just exited:

1) the S&P 500's expansion since June 2009, a little more than 11 percent, is better than all but 3 of the 7 recessions;

2) both ISM Manufacturing and Industrial Production are in line with past expansions;

3) retail sales growth is at the bottom of the range;

4) nonfarm payrolls has seen a continued contraction, "but we would note that this is not too different than the previous two expansions where there was a 'jobless' recovery."

5) "The data at 14 months, we believe, does not support the belief by many that the economy is heading for a double-dip recession and hence we remain positive."


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