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Consumer Metrics Institute: ‘Double Dip’ Very Real

Posted by Larry Doyle on April 22, 2010 2:44 PM |

I have become a huge fan of Rick Davis of the Consumer Metrics Institute, the Colorado-based effort that tracks real-time consumer purchases to project future economic growth. Recall that during my March 28th conversation with Rick on No Quarter Radio’s Sense on Cents with Larry Doyle, Rick projected that 2nd quarter 2010 GDP would register a -1.5% (yes, that is a negative GDP for 2nd quarter 2010). You can read a recap of my interview with Rick here.

What does Rick see lately? Let’s navigate. Rick wrote yesterday:

Speaking of what we do, our Contraction Watch (see top chart below) continues to show a contraction event that has not yet formed a clear bottom. The contraction has, however, extended long enough that the likelihood of the dreaded ‘double dip’ has become very real. Nine of our ten sector indexes are moving in negative territory, with even the Automotive Index retreating to year-over-year contraction after the spike caused by early April incentives faded (see bottom chart below). We have now moved about half-way through the ‘demand’ side activity time period that will ultimately flow down to the third quarter’s ‘production’ side GDP. Unless the blue line in the Contraction Watch chart rises sharply over the next 40 days we can expect that the third quarter GDP will come in very near the second quarter’s, i.e. contracting at about a 1.5% annualized rate.

Rick’s economic analysis is way ahead of the curve. My conversation with him one month ago was off the charts, and I look forward to having him back on NQR’s Sense on Cents with Larry Doyle on Sunday, May 2nd.


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