There’s been some good news lately, including the encouraging signs in real estate. New home sales rose last month, posting the third straight monthly increase. For some, the writing is now on the wall. “Recession is over, economy is recovering,” declared John Silvia, Wells Fargo’s chief economist, in a research note, according to The New York Times.
We’re of a mind to agree with the first part of the statement, but not the second, at least not yet. As we’ve been discussing for some time, the technical conclusion of the recession is near or perhaps already here. We began considering the end back in March, when we examined the business cycle forecasting powers of the trend in initial jobless claims. In the months since, the reasoning grew stronger for anticipating that the recession’s end was approaching. News such as yesterday’s pop in new home sales only strengthens the case. But as we’ve said many times in recent months, the end of the recession this time is likely to be followed by an unusually long period of stagnation before economic growth returns in earnest.