“Economist Gary Shilling says we’re still headed for a recession this year despite the market’s recent bullish behavior, the Globe and Mail reports.
“Despite the recent euphoria of investors over U.S. stocks, we believe the economy is likely to weaken as the year progresses, led by renewed consumer retrenchment,” Shilling wrote in a note to investors.
Shilling points to a number of unusual indicators that suggest the U.S. economy may be weaker than most people believe.
For example, electricity generation is falling rapidly, which this may be because this winter was unusually mild but could also indicate declining economic activity.
Moreover, U.S. rail shipments and the number of containers coming into the ports of Los Angeles and Long Beach, the main entry point for Asian trade in the United States, are both declining.
And while GDP growth has been accelerating recently, Shilling says much of the increase in economic output can be attributed to rising inventories, also not a good sign.
“Either we’re dead wrong on the outlook or investors are ignoring reality as they emphasize risk on trades,” he says.
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