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UBS Economist: No 2011 U.S. Recession (UBS)
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Many reports have been signaling that the United States is about to slide into another recession, and many have noted over and over that the recession is either already here or never really went away. Now we have UBS AG (NYSE: UBS) signaling less of a drop in the GDP rate than many are calling for in the third quarter and the rate for the fourth quarter. If UBS is right, there is no true recession (or double dip recession) even if it feels like similar to a recession.
The economists at the firm have noted in their Monday research that the third quarter estimates of US GDP could exceed 2.5% on an annualized basis and the target has been raised to 2.6% growth from 2.0% growth. The growth rate for the fourth quarter is currently projected to be 2.0%.
The reason for the increased forecast is that the firm recalculated its data after last week’s retail sales data for September and after factoring in inventory levels, constructions spending, and also the recent foreign trade data. This is despite what UBS expects to see as a negative Empire State and a positive reading on the Industrial Production data from September.
Keep in mind that UBS’ Paul Donovan was mostly focused on the caution out of Europe, so this was included in a more broad call rather than in a daily economic report that is solely highlighting the greatness expected out of America.
There is some caution for this week from Donovan: “The risk for this week is that different factions in the Euro area try to control the public agenda, and present their viewpoint as being that of the consensus. The consensus from the Euro area will not be known until 23 October. Maybe not even then.” The UBS note is even titled, “The Euro area must do something! The G20 says so.”
The preliminary figure for third quarter GDP is due on Thursday, October 27, 2011. Keep in mind that GDP figures are often revised substantially and the final revision will not be known for about 60 days after the first preliminary report.
JON C. OGG
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