"U.S. Recession May Be Over, Barclays’ Knapp Says: Chart of Day
May 11 (Bloomberg) -- The longest U.S. recession since the Great Depression may have ended last month, according to Barry Knapp, a strategist at Barclays Capital.
“We appear to be in the sweet spot of a recovery,” Knapp wrote in a weekly report on May 8.
The CHART OF THE DAY highlights spending on services, one indicator that Knapp used to reach his conclusion. Outlays rose 1.5 percent in each of the past two quarters after a 0.1 percent drop in last year’s third quarter, the first decline since 1991, according to data compiled by the Commerce Department.
“Service-sector employers expected sharp drops in demand, and may have overshot in terms of cutting back” on workers, he wrote. The report cited figures from ADP Employer Services that showed job losses at service companies slowed to 229,000 last month from 384,000 in March.
Quarterly percentage changes in demand for durable goods, made to last more than three years, and other goods are included in the chart. Both rebounded in the first quarter after tumbling in 2008’s final three months.
The National Bureau of Economic Research may eventually declare April 2009 as the end of the recession, Knapp’s report said. The slump began in December 2007, according to the panel, which took a year to set that date.
While capital markets are also on the mend, stocks “have overshot the improvement of the economic outlook,” Knapp wrote. His year-end estimate of 757 for the Standard & Poor’s 500 Index is the lowest among 11 strategists in a Bloomberg survey.
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