What Chinese Recession Numbers Look Like

As 2009 is kicking off, it is interesting to start seeing the many many forecasts for the US and other major economies.  The NBER finally came clean last month about our own organic homegrown recession starting roughly in December 2007.  And everyone is expecting the recession to continue in 2009.  They expect it here in the U.S., they expect it in the E.U., and they expect it in Asia.  What is interesting is how economists are still projecting above-world growth in China.

China’s Finance Minister said on China Central Televisionthat it is widely expected that China’s fiscal revenue growth will slowin 2009. China is due tomorrow to discuss the state of its property industry.  It seems that yet another"Chinese stimulus" package is forthcoming, although we’dstill caution that it is economically not viable anywhere in the worldto try to artificially alter the intrinsic value of any underlying asset.  The only real answers there comes from time and the marketplace.  At the end of the day, money is still worth what people think it is worth.

CNBC gave a nice snapshot this morning showing what the projectionswere from major Wall Street firms this morning.  We’d note that thesenumbers are different from prior numbers we saw just two weeks ago, butthe year has started and these may be the new figures.  Their numbersgiven are as follows:

• Citigroup             +8.2%
• Merrill Lynch       +8.0%
• Morgan Stanley   +7.5%
• Credit Suisse      +7.2%
• Goldman Sachs  +6.0%

There is just one small problem.  Where are these numbers coming from?  Our ship brokering contacts and import/export contacts arenot showing any gains.  So far the only positive aspects noticed arethat some areas just might be "not as huge of a drop-off" as had beenseen before. The good news about this is that there are so manyinfrastructure projects and so many areas which have not yet beendeveloped that the traditional speed and traditional delivery pointsmight not be as relevant as before.

Most economists are still looking for sharp losses in US GDP.  Wherethat peak actually comes into play is the question.  US Unemploymentfor December is due this Friday and the data is expected to be ugly.We have already seen how consensus estimates are currently bracing for7% unemployment and for a loss of roughly 500,000 payroll jobs. 

What would Michigan and California give to see even half of China’s projected growth again?

Jon C. Ogg
January 5, 2009