How will the fiscal cliff talks end? Will the leaders reach a last-minute deal, saving the economy from disaster, like a script of a typical television drama?
Spoiler alert: We could already be in a recession.
The recession signal is being sent from the latest U.S. current account deficit report released earlier Tuesday.
According to the data, imports are now down two months in a row having fallen 8.4% in the third quarter and 2% in the prior quarter. This is a rare event and has definitely raises the recessionary “red flag,” according to Robert Brusca, chief economist at FAO Economics. When the economy weakens, imports weaken rather quickly, Brusca notes.
The last time imports declined for two quarters was in 2009, the end of a four-quarter slide in imports during the Great Recession.
Fewer imports is a sign that domestic demand is faltering. A recession is “a real risk,” Brusca said.
It is definitely not a great economic environment for the austerity that is coming next year, regardless of the outcome of the fiscal-cliff negotiations.
“Now is not the time to take easy tax breaks, like the deduction of mortgage interest, that is driving the economy,” he said. “If you don’t think this is a risky situation, you are just not using your head.”
What was that definition of insanity again? "To keep doing what you have been doing and expecting a different outcome".
We move FORWARD into the next recession following our fearless and eternal campaigner. Do you think he can blame the next recession on the "intelligence community"?
