Recession In 2008?


With the last big batch of economic data due Thursday, will we find out that the economy is headed for a recession in 2008?

Deutsche Bank Chief US Fixed Income Economist, Joe LaVorgna joins the panel for this conversation. Following is a synopsis of his main points.

Are you bullish on the economy?

Yes, says LaVorgna. The official government data shows the consumer is in very good shape, he explains. Tax receipts suggest income growth is holding steady at about 6%. And basically the job market hasn’t fallen apart. As long as the job market remains in tact, the consumer can withstand a lot.

Is the jobs report the lynch pin of the economy?

Yes. The job market is weakening but it hasn’t fallen apart. If you get a big drop in consumer confidence it causes people to pull back on spending but that hasn’t happened yet, says La Vorgna.

And I think the reason it hasn’t happened is the housing problem is regional -- and interest rates aren’t very high. As long as banks don’t tighten their spending standards things will be fine.

If Joe LaVorgna is right and the economy is firing on all cylinders –what’s the trade?

Mastercard says Guy Adami.

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Trader disclosure: On Dec. 26, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (YHOO), (ATVI), (DIS); Pete Najarian Owns (C), (MS), (N), (ANR); Pete Najarian Owns (HAL) Options, (MSFT) Options, (TGT) Options, (YHOO) Options; Finerman's Firm Owns (VLO), (WMT), (YHOO), (SUN), (GS), (PLCE), (SKS); Finerman's Firm Is Short (IJR), (MDY), (IWM), (SPY), (SPG), (TCO), (IYR); Finerman's Firm Is Short (LEH) And Owns (LEH) Puts; Finerman's Firm Owns (MBI) Puts; Finerman's Firm Owns (MSFT) Options; Finerman's Firm Owns Russell 2000 Puts; Finerman's Firm Owns S&P 500 Puts