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    Economy in “Soft Patch” But New Recession “Unlikely,” Schwab’s Sonders Says

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    Wednesday's Beige Book report and durable goods data brought more evidence of a weakening economy, and that's before taking into account the unknowable impact of the debt-ceiling impasse. Given the still weak jobs market and housing sector, economists are slashing growth forecasts and talk of a "double-dip" recession is resurfacing.

    But fear not. This too shall pass, says Liz Ann Sonders, chief investment strategist at Charles Schwab.

    The economy is experiencing a "soft patch", similar to what occurred last summer, although "clearly there are some other factors at play," Sonders says. "It's global. It's a slowdown but I think another full-blown recession is unlikely."

    In addition to the debt-ceiling debate, those "other factors" include the spike in oil prices last spring, extreme weather and the loss of Japanese manufacturing following the devastating earthquake and Tsunami in March. Oil prices have since moderated, Japanese production is coming back on line and "I don't think economists have sufficiently added that back into numbers for the second half," she says. "Now you've got this debt ceiling crimp on confidence that hopefully will go away and then I think we get a lift."

    To be sure (and clear), Sonders is not looking for a booming economy and says the deleveraging process will continue to weigh on growth for several years. Still, she predicts GDP growth will approach 3% in the second half of 2011 and that the current expansion will last "another couple of years."

    Aaron Task is the host of The Daily Ticker. You can follow him on Twitter at @atask or email him at altask@yahoo.com

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    87 comments

    • MatthewD  •  10 months ago
      The real problem is you can't regulate GREED.
      • STEVE 9 months ago
        No, but you can punish/discourage greedy activities.
      • TechDave 9 months ago
        What's wrong with greed. Maybe you work for free? Misbehavior can occur by greedy people, just like hunger might make some people steal. Should we regulate hunger?
      • Dave 9 months ago
        Actually that is not entirely correct. Eliminate the Fed Reserve and fire Geitner. Hmmm part of the greed would be gone.
    • SamC  •  10 months ago
      Well, she has to remain positive or investors will just sit on their money. No investing, no commissions.
      • Dave 9 months ago
        If I saw a trader on the street and he asked help for help because the angry mob is chasing him, I would reply back to him by saying "Hey he is over here get him!!!!"
    • scott b  •  10 months ago
      what planet is she living on? unemp[loyment is still 9 percent. that should be a recession in anyones book
      • Andy 10 months ago
        Unemployment is closer to 25%- 35%. Once unemployment insurance expires those effected individuals drop out of the count. They changed the method for counting the unemployed in the early 1990's for exactly this reason. You must look at the "labor participation" rate to get a feeling for this. It's the lowest on record- somewhere around 65%.
      • Nutti 10 months ago
        Kids, old people, disabled, students... they make up the 25%. The rest 10% is perhaps unemployed.
      • Andy 10 months ago
        Nutti:
        The groups you mentioned are not counted as being in the "labor force" to begin with. Our unemnployment rate has been above 20% for the last 3 years- depression level. Don't believe everything you hear on TV.
    • Barry W. Shook  •  10 months ago
      Liz Ann Sonders, I studied economics at college and did a historical perspective of economic recessions and depressions (including a double-dip scenario). One important thing in common: The louder and more vocal the "experts" are in proclaiming one or another WON'T happen, is when it DOES.
      • Dave 9 months ago
        Awesome Barry well said
    • BZ  •  10 months ago
      If tech ticker is into gold, it must be OVER !!!
    • The Ben Bernank  •  9 months ago
      I'd rather hump a cactus than listen to you, Sonders...
    • Herky1942  •  9 months ago
      Right " No double dip recession. it's going all the way to Depression!
    • JohnCalipariCheats  •  10 months ago
      "Oil prices have since moderated." Really? still almost $4.00 here. This economy is toast and has been for some time. Wake up honey.
    • ichiban  •  9 months ago
      Can't have double dip when we never came out of the first.
    • Michele  •  10 months ago
      Another stupid "power of suggestion." Taxpayers, please don't be fooled with these clowns. Think with your head and judge based on what you have in your pockets! Politicians DO NOT, and I repeat, DO NOT create jobs. WE DO, if we have money to spend.
    • Dash  •  10 months ago
      LOL--New Recession Unlikely.....we have not gotten out of the DEPRESSION yet.
    • Vote Them All Out  •  9 months ago
      Anyone know where she got her degree because I want to make sure I don't send MY kids to that college.
    • YFU Number One  •  10 months ago
      A lot of people gripe about how people over-extended themselves during the boom and how they were so FOOLISH to do that, which is correct, but they don’t acknowledge that without all the reckless use of credit by consumers, THERE WOULDN’T HAVE BEEN ANY BOOM. Do you think consumers could have spent enough to fuel that growth using CASH? Not a chance. The demand problem has two major facets: Americans are not eager to cram their homes with cheap garbage from China anymore, and they couldn’t do it without releveraging anyway, which they are also not eager to do. Liz Ann is wise not to expect a boom. What a smart gal she is.
    • SeQuEnTiAL  •  9 months ago
      We're still in a recession, even though the government said the recession ended in July 2009. Housing already "double dipped", whatever the f that is supposed to mean.
    • John  •  10 months ago
      The "recovery" propaganda is still think. Can't have a double dip recession because when never came out of the first recession. Let's call it what it really is a Depression! That's not a "soft patch" lol.
    • cootiegiver  •  10 months ago
      These guys determine whether we are in a recession by looking at GDP growth, but the only reason GDP growth looks good is that government spending, no matter how wasteful, is included in the GDP statistic. As Lloyd Benson once said, "You know, if you let me write $200 billion worth of hot checks every year, I could give you an illusion of prosperity, too."

      Now the number is more like $2 trillion though.
    • Juror Number 9  •  10 months ago
      Peter Schiff was right!!
    • Big Oil is watching  •  10 months ago
      screw the rich. we are being price gouged everywhere, and the rich are sitting on cash and wont hire Americans. I say we start a consumer revolt! Buy nothing unless it is food.
    • rosep  •  9 months ago
      Now why would any analysis want to tell us the truth? Maybe cause we would pull
      out any money ,we had in the stock market and sit on it. You work hard for your money
      and the last thing you want, to see is it worth less than you paid for it, the stock that
      is. The stock analysis need their jobs, so all they can do is tell us to keep buying.
    • Appletree  •  10 months ago
      The Govt. says we have 1.9% growth. Inflation is now at 3.6% (really 6-10% if you do count stuff we actually buy, like food and fuel). That means we are in a 1.7% CONTRACTION right now! We never left a recession....

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