May 22nd, 2009
03:44 PM GMT
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A lot has been made about the so called green shoots of recovery. And I'll be the first to admit it's a lot better than being in freefall.

But let's not get too excited here. There's a huge space between being out of freefall and getting to a sustained recovery.

When I think about recovery, I'm not talking about the end of negative growth. To me real recovery is one which growth rates are closer to longer term trends.

Don't get me wrong, the huge improvements we've seen in credit markets since the collapse of Lehman Brothers last September, and the sharp rally in stock markets off their March lows is certainly welcomed.

But my extensive travels over the last few months tell me, that there's still plenty of caution to go around.

I've been at several conferences, and when I ask people whether they feel the the sharp rally in equities is sustainable, many are skeptical and believe the markets at some point could retest their lows.

When I asked a group of chief financial officers and comptrollers when they expect a sustained economic recovery, a third of those who raised their hands believe it won't be until 2012 and beyond. And remember, these are the guys holding the purse strings.

As to the other two-thirds of that group, it was divided between next year and 2011.

I've been taking these informal polls since last November, and I'd say the majority of those I ask, believe any sustained recovery won't happen before 2011.

So what's standing in the way? Plenty. Unemployment in the United States and elsewhere continues to rise, consumers are focused on saving instead of spending, housing and commercial property in the U.S. and elsewhere remain under pressure, and banks continue to deleverage.

Confidence of course, is key to any recovery. Even once we get out of negative growth I fear we could bump along the bottom for a quite a while. I am not alone in this fear. I hope I am wrong, but I suspect I will turn out to be right.

 What do you think?



soundoff (32 Responses)
  1. BIDaWIZ

    I too believe that we are still not at or near an inflection point in which growth rates will return to normalized levels.

    The government has initiated important programs to get this country back on track. But, those actions will take time to bear fruit as it will take this country more time to recover from the mistakes of the past.

    Having said that, I do believe this country is well positioned in the long-term to grow, albeit at a more subdued rate.

    May 22, 2009 at 9:47 pm |
  2. Per Holmlund

    Believe what you can see

    When was throwing pearls to pigs an improvement? When was making a fire for crows an improvement? When was spending trillions on politicians an improvement?

    Macro: What will the drivers bee in tomorrow’s economy: government spending, deficits and higher taxes? Micro: The third down wave, the economic, will slowly work its way through company balance sheets. Markets: Look at Gold, Long Term Rates and the Dollar. And please, not intra day charts, but weekly and monthly.

    If our three key objects behave there will be hope. A dollar going north and breaking the 105-110 level against the yen, long term rates turning south and Gold not going north breaking the magic 1000-level with strength. (Gold one of few objects that is keeping its positive trend from 2001!)

    But the graphs are indicating another story. Hope, Bob Hope, a joke. Same story as last time but more serious this time. Yes we can, can become yes we can burn Other Peoples Money. Last time it was the market and this time it’s the government if the rope doesn’t listen to the music.

    And when did you see a rope moving into haven because someone played music? So as long as S&P stays under 1050 play the rabbit and buy and sell.

    May 23, 2009 at 9:48 am |
  3. Ndem Orji

    The signs of full recovery and stable growth will start showing in USA by the end of fourth quarter 2010. That would be about 8 quarters since president Obama started galvanising things aright. With the collective will and efforts of the people focused on doing it right, especially the banks it is achievable.-Ndem Orji PH Nigeria.

    May 23, 2009 at 3:26 pm |
  4. Andreas, Stockholm

    There are two problems that still need to be addressed before any kind of recovery can start, one old and one new.

    The old problem is still all the so called toxic assets, these have not been scrubbed off the map yet. In fact they have been conveniently ignored for a very long time all the while US media keep pointing towards the Eurozone as if that will solve it. The implication being that Euroarea banks have not dealt with the problem as the US and UK banks have. Nothing could be further from the truth, this whole episode started because European banks would no longer purchase AAA MB securities and they quickly blew the whistle and had to write down at the time enormous losses.

    The new problem is the round the clock shift work at the US dollar printing presses. This is what S&P actually alluded to in their UK sovereign outlook downgrade warning last week. The Treasury cannot in the long run continue this exercise without it seriously hurting the currency. In fact the double play where the Treasury and Federal Reserve are feeding off each other makes more and more look for something else. When TIPS demand starts to increase it will signal the beginning of the end of this merry go round. If the US mainstreet economy has not starting pulling around by then it could mean serious trouble.

    I don't want to sound too gloomy but then again who really thinks more debt can solve a debt crisis on this level? If more spending and debt really is the only answer then China and India may be the only viable path to achieve that. Question is : is that what they want?

    May 23, 2009 at 8:26 pm |
  5. BIG B

    WHY, DOESNT THE PRIVATE OWNERS OF THE FEDERAL RESERVE SHOW UP AT CAPITOL HILL AND GET THEIR ASSES GRILLED?? [I KNOW THE 1913 FRA AND ANONIMINOTY}!!! BUT 1913 WAS A LONG TIME AGO. THE IMPERIALISTIC SOCIETY THAT THESE FEW [ROCKEFELLERS, ROTHSCHILDS,MORGAN CHASE WARBURG] PLUS SOME MORE SCUMBAGS. MUST GO!!!! LETS JUST CHECK OUT FORT KNOX... THE UNITED STATES IS AN IMPERIAL SOCIETY/NATION. SOCIALIZED MEDICINE IS 100 PERCENT THE WAY, BUT WE AMERICANS ARE REALLY UNEDUCATED...CANADA IS ALWAYS RANKED IN THE TOP 5 NATIONS IN QUALITY OF LIFE...BUT THEIR MEDICAL SYSTEM SUCKS, THAT IS AN OUTRIGHT FALSEHOOD!!! ALL NATIONS WHO TAKE CARE AND ARE CONCERNED ABOUT THE WELL BEING OF THEIR CITIZENS, HAVE A NATIONALIZED HEALTH CARE SYSTEM. ANY NATION THAT MAKES A PROFIT FROM SICK CITIZENS IS SICK!! BUT THE POWER OF CORPORATE AMERICA CAN EASILY BRAINWASH THE US POPULATION INTO THINKING THAT THEY WILL SUFFER AND NOT RECIEVE 1ST CLASS CARE. THIS IS NOT A CONCERN FOR OUR HEALTH ,BUT WAY WAY MORE OF A CONCERN FOR THEIR BANK ACCOUNTS!!! IF ANY CITIZEN DOES NOT BELIEVE IT...GET A MENTAL EXAM!! ALSO, CONCERNING THE BRAVE MOTHER REFUSING CHEMOTHERAPY TO HER, YES HER SON. BULLETIN... IN CASE YOU DONT KNOW CHEMOTHERAPY HAS ONLY A 2 PERCENT SUCCESS RATE. I DONT THINK ANYONE IN A SANE ,SOUND MIND WOULD CHANCE THOSE ODDS!! CAN'T PEOPLE PUT TOGETHER THIS...NO PU NISHMENT IN SCHOOL, CHILD CAN CALL POLICE ON PARENTS, PARENTS /TEACHERS HAVE NO AUTHORITY...CHILD GETS FORCED TO UNDERGO DEADLY CHEMOTHERAPY. WAKE UP, THE STATE/GOVERNMENT IS TAKING OVER!!! THIS IS NOT A DEMOCRACY,, AS LONG AS THE FEDERAL RESERVE IS NOT OWNED BY THE GOVERNMENT, AND THESE PRIVATE OWNERS DEFINATELY MANIPULATE THE FLOW OF CURRENCY. THE STOCK MARKET BEING THEIR PRIVATE PLAYGROUND!!! WE WILL ONLY RECOVER WHEN AND ONLY WHEN THE FEDERAL RESERVE OWNERS SAY SO!!!

    May 23, 2009 at 9:02 pm |
  6. fiat money

    Dear readers, I wonder whether all these financial magicians believe that they could so easily get away with this immense creation of new money, esp. since we (the so-called 'developed world') have already vastly been profiteurs in such an imbalance of goods – those required for survival and those for mere entertainment and pleasure.
    In the end – when the going gets tougher – it will proove, that the world is less a casino rather than a rough place to survive in. Beware! The meaningless phrase 'Negative growth' already shows how wrong the perception has led us towards self-deception. Sustainabilitly and acting accordingly certainly talks different.
    What is a negative catch? An unseccessfull hunt or a wronged shot?
    In my humble opinion, the world has been out of balance for quite a while already and is just trying to get back to normal – if we so let it and let go of our inevitably self destructive greed which has not only ruined the finances but moreover seems on its best way to challenge the basics of living – the earth and its climate. That could be the lesson to learn, let`s not miss it.

    May 23, 2009 at 10:44 pm |
  7. Rick Bateman

    Baby boomers represent 30% or more of the population of any G8 style economy and 60% of its wealth. Between the ages of 54 and 74 (retirement), average annual personal expenditures decline by 60%. In other words, a 54 year old employed person spends $50k. Then they retire and over the next twenty years that declines to $20k. Their cohort will reach a tipping point in 2010 and over the following ten years the majority of them will retire. They will withdraw their money, their labor and critically, their experience, from the major economies around the world.

    Consumer spending accounts for about 70% of the US economy. Since all current efforts to stimulate the economy center around getting consumers to INCREASE spending, this factor and its timeing ( unmentioned in any "downturn" related news articles) will clearly be a significant part of the equation.

    I agree with those who say we are going to continue to have downturn for the next two to three years. Then the demographics will really kick in. Meanwhile, about the same time, the geopolitics goes sideways.

    The three North American generations that currently matter, Boomer, X and Y, have never experienced histroric change and therefore are unable to imagine it or foresee it, let alone plan for it. The green shoots, when they do appear, won't be the kind you see on trees in the spring. They will be the kind you see growing up through the cracks of an abandoned road.

    Rick Bateman
    Victoria BC Canada

    May 23, 2009 at 11:53 pm |
  8. Jonathan

    Share market is a where people put their money when bank interest is low. Even when all the CEO are putting thier bets on lower share price, most of the retail investor are drawing money to company when the PE ratio , price is at its lowest or the big player after all the minor competitor has failed. Mining stock with gold exports will perform better than others.

    May 24, 2009 at 12:54 am |
  9. Bubba

    The government is acting in our best interest and doing the right things. It won't happen overnight but everything will be fine because of this. I know this to be true because the media tells me so. Contrary voices are never heard so – it must be true!

    Its great to live in a country so unlike Venezuela where the media and the peoples voices are free. Where no finger hovers over the delete key of the peoples voice.

    For now its a delete key.

    May 24, 2009 at 2:01 am |
  10. rene p

    i think the world has changed. It may not be the same that Americans view it to be, it probably has been changing faster than the Americans want to believe. The catch up has been happening all over, and this recent world economic problem is only quickening the whole world catching up with the US. It may still be the most powerful country in the world, but life is getting better out there too in most countries. While this economic problem is America's doing, the economies of Asia and the rest of the world will catch up soon enough. Standards of living are going to be better elsewhere, while that of the US may stagnate or standstill for a while.

    May 24, 2009 at 11:11 am |
  11. John C

    We should remember that "growth" is created when a company becomes profitable, AND decides to re-invest a portion of that profit in the company's own business activities. So, first profit, then re-investment. Getting companies profitable is only the first step, management must also believe in their company's activity enough to re-invest, another definition of "confidence". Mr Benjamin, your comments are so right, any you're the one source of economic wisdom that I trust.

    May 24, 2009 at 6:40 pm |
  12. Phil, Heidelberg, Germany

    And our Treasury keeps handing our tax money to GM to declare bankruptcy. Really good thinking – where did Obie find him? in Chicago – must have been acorns financial expert.

    May 25, 2009 at 9:02 am |
  13. KK Singh

    Well, recovery will take place. When? Not an important question, except for brokers and their eco/pol friends. Oh sorry, I forget about unemployed men and women. Recovery will start slowly when purchasing power of ppl sises.
    Impotant question here is after recovery when will next recession start? Earlier it was in a cycle of 5 yrs but now 8 yrs, severity varrying.Many politicians/economists were heard saying that this kind of free market will no longer exist in this world. This was the final bdeath bell for capitalism!!!!!!! All bull, we will forget about all this and our media will be ga-ga over market going north only to curse management in next economic doom.
    So what next?

    May 25, 2009 at 10:59 am |
  14. diana

    Rather than talk, talk, talk, I think we should act, each in his/her own manner. If we can spend money, we spend it in an economic way. If we can't, we help those who can't find jobs or don't have anything to eat. Talking won't help the situation.

    May 25, 2009 at 11:17 am |
  15. Pinto

    I think people and companies have adjusted to the new scenario and that green shoots are meaningful. People have being saving money since September and spending will improve once unemployment ceases to grow. I am quite optimistic about the next months.

    May 25, 2009 at 11:38 am |
  16. Ronald G. Watson

    Sustainable recovery will begin after Christmas this year in the States, simply because the pieces are in place, which means that the legislation has been passed, mostly set in motion. In addition, American workers are the best bet there is to put things back in place. All they needed was a leader, and Obama is now that man.
    Of course economists, bankers and accountants are always negative, and their forecasts for the future are usually far off their mark, though they can explain very well what happened in the past.
    What does make perfect sense is that Americans are saving about 4% of their income, and it´s about time! They lived in a consumer´s paradise and went wild about spending and borrowing, which had to stop and did. More important, regulations are back in place again, and this means that the checks and balances of economics will mean sustained growth.

    May 25, 2009 at 11:38 am |
  17. Peter Kramer

    The economy will not improve much, because such an improvement will immediately be offset by a rise in oil prices (caused by us having reached peak oil). Very little has been done to get us off oil, and hence, there's very little hope of substantial improvement in the economy any time soon.

    May 25, 2009 at 12:20 pm |
  18. Daniel Dyner

    I also unfortunately have to agree with your opinion. In fact, the credit card crisis has still not exploded and when that happens, it will also affect greatly the economic "recovery".
    Thank you,
    Daniel Dyner

    May 25, 2009 at 1:13 pm |
  19. Prakash k

    Very well said. But I think I might take a little longer to come out of this economic chaos. The reason being is that people have not understood the actual depth of the crisis. Sooner people get hold of the economic situation is the better. costaricahq.com can also help so many people in this regard. Its sure.

    May 25, 2009 at 4:53 pm |
  20. no

    infowars.com banks taking our money, no jobs, no free speech,dollar crashing is all good

    May 25, 2009 at 6:38 pm |
  21. K.Srinivasan

    President is more preoccupied about morale of past regime.He is busy to undo this. But these things can wait. No single job is created. in these four months. At this rate it will take five years things to come under control. The life style can not return to 2007 level.It will be 40% less.

    May 26, 2009 at 2:55 pm |
  22. Nam(South Korea,Busan)

    We need to smart.

    An old system is already gone.
    A new system is already in.

    This The global new deal system we must deal with it.

    May 26, 2009 at 4:06 pm |
  23. Paul Harris

    We got into this very deep hole by driving with financial turbochargers called Credit Default Swops. Now that they have proven themselves to be lethal we have to drive out of the same hole with just the power of a pre-CDS motor. It's got to take much longer to drive out than it did to drive in. One doesn't need to be an economics expert to figure that out.

    May 27, 2009 at 7:49 am |
  24. Raul Martinez

    God bless the United States and its citizens. We will have no more manufacturing jobs in the US.

    We have lost our manufacturing base, because government overtaxed and overburdened business with regulations and filing requirements and made the cost of doing business prohibitive. So they left.

    Why stick around when you can make more money be going overseas. Sometimes, right across the border to Mexico such as in GM's case.

    Viva GM, huh?

    There will be no recovery without decent paying jobs. Economists don't pay my mortgage.

    May 28, 2009 at 1:16 am |
  25. Tim Clarke

    I suspect that not many people will consider that you are too optimistic, but I do, for a very sinmple reason.
    Excessive greed fueled the unsustainable rise in markets and economies over at lest the last twenty years and this has now given way quite naturally, to fear, which is now powering markets and economies throughout the world.
    Not only is there no sign that this new predominace of fear is coming to an end, but there is good evidence to suggest that it hasn't fully got hold of the average person and until it does we will still be a long way from the bottom!

    May 29, 2009 at 12:22 pm |
  26. guapo

    Recovery? no as we thought, everything has changed. this is a new world with new experiences. Everything will be distorted, the old "order" has gone

    We have to understand that we will surf on periods of grow and on periods of depression ,

    the lenght of the cycle?
    it would be determinated by oil price, commodity or food-water shortage or wars due to them. We wil see Hunger and craziness due to it.

    Let me say that the medicine that FED is giving us is really toxic. This Chemo recipe will have hyperinflate and hyper deflate effects alike.

    We will face a commodity war for petrol, food, water, gold in a global scale,new technologies should be based on supply chain shortage to be sustainable.

    also goberments would cooperate with each other because of they would need to coordinate to have effective action with the global community.

    Can you trust in the dollar of the future and other full steamed printed currencies? no It will be a worthless currency. and this mistrust will also mark the depression of the cycle.

    there is a fracture between the goberments and thecommunity marked by the mistrust, bribery , miscommunication and interest.

    Not a relaxed world is coming. Not suitable to be retireed

    May 29, 2009 at 3:57 pm |
  27. GERARD CARRAS

    BEING IN THE CAR BUSSINESS FOR 35 YEARS IWOULD HAVE TO SAY GM CHRYSLER AND FORD HAVE BEEN TAKING ADVANTAGE OF THEIR CUSTOMERS BY MAKING DISPOSABLE VEHICLES MAKING IT UNAFFORDABLE TO REPAIR AND CAUSING THE VALUE TO DROP TO NOTHING.
    THE JAPANESE ARE MAKING DEPENDABLE VEHICLES THAT ARE DEPENDABLE AND HOLD THEIR VALUE;
    THERE NEEDS TO BE A DRASTIC CHANGE TO CHANGE PEOPLES MINDS,AND FROM WHAT I SEE COMMING OUT NOTHING HAS CHANGED.

    May 31, 2009 at 7:32 pm |
  28. htchua

    The skeptics could be proven wrong again. Alas, who could fortell that the financial markets meltdown with the severity not seen since 1932. Those who shorted during the down leg probably are losing heavily during this sudden upturn. I am not a financial expert but I do know that your probability of success is much higher if you bet against the crowd. So the crowd mentality is still bearish and I am going to ride on this bull till the bullish view is become dominant theme.

    June 1, 2009 at 10:36 am |
  29. Manuel Vilhena

    I believe than once 0% growth in US is achieved, BRIC will keep on its steadily growth and that will help Europe to grow.

    When this will happen? The sooner the better.

    Looking forward to reading more articles.

    June 14, 2009 at 9:12 pm |
  30. A.M. Deist

    There will be a recovery, but won't be for capitalism. We still have massive credit card defaults coming when those 6+ million and counting start losing their incomes. We also will have large quantities of commercial real estate defaults as businesses continue to close. Those who have touted a flat tax, a consumption tax, a fair tax, or whatever you want to call it must surely realize by now that it can't work unless our society is one with large consumption. Those days are over. Our leadership needs to figure out how to modify our economic system so it can survive. The borrowing from others to allow us to spend is coming to a ceasing halt, and sooner rather than later.

    June 14, 2009 at 10:51 pm |
  31. RandyHillTexas

    This is not the first or the last oil surge followed by a crash. Just wait! we will soon see oil back in the $20 range. Specualtion can only last so long! Like the housing market, soon the speculators will stop banking on demand increasing now that the economy shows "green sprouts"
    What if the American passion for automobiles never is as passionate? What if we never see auto sales back above 10 milllion per year. The recent surge in oil over the past four months is going to have a severe impact on any glimps of an economic recovery. Before we all go out talking about "Peak Oil" and how we are going to be paying $5 per gallon lets talk about the $3 Trillion in Comercial Real Estate that is to hit in the next 18 months. How about the maturity of millions of adjustable rate mortages in the next 36 months. If we have a "super spike' as some of you think...........the back side will be even greater!!! We will see oil crash....its the economic system we have in this country. OPEC can produce it for $1 per barrel, here it cost us 25 times that. American auto manufacturers spend close to $70 per hour on labor..........the forien, (who build them here in America) below $50.
    The US economic recovery will not happen with oil at $100 or $80 or even $70. The facts are we have a long way to go before this economy gets back going. It all depends on the economy being lubricated with cheap oil. We havent seen anything yet! Go back 10 years and look at the economy, fuel demand, oil inventories. While your there see what a barrel of oil was and think about the economy then and now. You see real quick this is what we call speculation. But if the gamble is off.......just a tad, the losses or retraction is much more severe. We are all in for a ride and its not going to be in a Prius.

    June 17, 2009 at 8:44 pm |
  32. javed

    The old problem is still all the so called toxic assets, these have not been scrubbed off the map yet. In fact they have been conveniently ignored for a very long time all the while US media keep pointing towards the Eurozone as if that will solve it. The implication being that Euroarea banks have not dealt with the problem as the US and UK banks have. Nothing could be further from the truth, this whole episode started because European banks would no longer purchase AAA MB securities and they quickly blew the whistle and had to write down at the time enormous losses. http://www.cdl4sure.com/

    March 13, 2014 at 9:22 am |

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