From Bloomberg:
The U.S. economy is stabilizing and may have bottomed out, as the government’s stimulus plan probably saved a million jobs, Nobel Prize winner Paul Krugman said today.
.....
"It’s quite possible, though not certain, that retrospectively, we’ll say that the recession ended in July or August, maybe September," Krugman, 56, said. "My guess is that we’ve bottomed out now, that August was probably the trough month."
From The Star Online:
THE global economy is at a turning point but it will take at least another two years before a full recovery can be seen, economist Paul Krugman said.
"We are now at the end of the beginning," he said.
Resulting from aggressive government stimulus, the global economy seems to have hit some sort of stabilisation although any dramatic "phoenix-like" recovery can be ruled out at the moment, according to Krugman.
Simply put, Krugman is looking at the same facts and statistics that other economists are looking at. Let's review them:
The pace of existing home sales appears to have bottomed. We have approximately two years of data to that effect. Stabilizing the sales pace are a high degree of affordability and an $8000 home buyer tax credit. However, prices will still move lower for the foreseeable future meaning we will have two bottoms -- one for sales and one for prices.
In addition, we also have a stabilizing new home sales market and
Housing starts are bottoming.
The ISM manufacturing number continues to increase, which has been bolstered by the increases in the
Philly Fed and Empire State numbers.
Initial unemployment claims continue to move lower
The pace of job losses continues to decline and
The unemployment rate is holding steady. Considering the drop in initial unemployment claims (and the more than 200,000 drop in the unadjusted number over the last three weeks) this may be a peak.
Year over year personal consumption expenditures are also holding steady
Rail traffic has bottomed on a month to month basis.
And credit markets have returned to far more normal yield levels.
Krugman does call for a second stimulus:
A second stimulus package for the economy is still needed, and should be directed at state and local governments as well as infrastructure spending, he said in an interview in Kuala Lumpur. The world economy may face several years of weak growth without falling into a "double-dip" recession, he said.
I'm not sure the political will is there for this -- especially considering the complications related to the health care debate right now. In addition, Krugman also makes the same observation many other economists are (myself included):
"What we’re seeing is stabilization," Krugman said. "We’re seeing that the great freefall and the nosedive seems to be over. It’s leveling out but that is very different from returning to normality."
However, the bottom line is more and more people are now arguing we're at a trough.