US is not out of recession yet

Comments on news report “US 'already out of recession', says expert”, 27/08/2009, http://www.theaustralian.news.com.au/business/story/0,28124,25986462-643,00.html

The report starts with the following:

RENOWNED Wall Street analyst Abby Joseph Cohen says the US economy is already out of recession, downplays the risk of a double dip and reckons the rebounding sharemarket "has got it right".
Now head of Goldman Sachs' Global Markets Institute, Ms Cohen yesterday used her Australian visit to echo Wall Street's support for President Barack Obama's reappointment of US Federal Reserve board chairman Ben Bernanke.
"He is the one who stood in the quicksand and kept everyone's head above the level," she said in an exclusive interview with The Australian in Sydney.
And she suggested the US economy would post 3 per cent annualised growth in the second half of this year in the early exit from recovery before easing to a modest 2 per cent expansion next year.
That's ahead of the quickly improving consensus outlook and represents a solid rebound from the US economy's initial sharp slump following the financial crisis that hit nearly a year ago.
Ms Cohen suggested that, while the US recovery would be impeded by weak consumer spending and housing, it would be initially propelled by a rebuilding of business inventories and the rest of the Obama administration's budget stimulus.

Ms Cohen has been good at analyzing equity market from time to time. However, that does not necessarily mean she is equally good at predicting the economy, especially in the wake of the Great Recession since the great depression in the 1930s.

There are many issues in the US economy that need not only very careful, but also very creative policy responses. There is a long road ahead to victory in beating the recession in the US.

The policy makers so far have avoided a total collapse of the banking and finance system and that was creative and should be commended. While everyone is hoping the policy makers will continue their success, but there is no guarantee that the success in avoiding a disaster will automatically translate into an equally success in pull the US economy out of its abyss while the economy is undergoing simultaneously big adjustments like increasing in savings, rising unemployment and reduced asset values. Further, there will be stronger international competition, if the US drops its protection measures introduced in the wake of the recession.

There is no room for complacency. Let’s wait for now and declare a victory until is secured and achieved.