JPM's Feroli Continues On His Doom And Gloom Tour, Anticipates Negative Private Payroll Growth For August
It is becoming increasingly apparently that Wall Street forgot to take its collective Lithium this month. After putting the kibosh on the "growth in 2010" thesis, Jim Hatzius started off a wave of downgrades like no other, (incidentally, just as we predicted on August 6: "Look for all other sell-side "strategists" to lower their economic outlook in kind, and the 2011 S&P
consensus to decline accordingly." - so far so good), setting off the herd of groupthinking Wall Street lemming economists into a direction they loathe, yet which even permasomethings like Joe LaVorgna are forced to acknowledge is inevitable. And as of yesterday, it is stating to appear that JPM is now solidly in second place after Goldman in its economic outlook: first the strategist said that the "disastrous" durable goods number would result in sub 1% Q3 GDP growth, which is even worse than Goldman's forecast, while today he was just quoted by Bloomberg as saying that private payrolls likely fell for the first time in eight months.
Employers are reluctant to take on more staff until they see more evidence of durable growth, keeping unemployment near a 26-year high and holding back the consumer spending that makes up 70 percent of the economy. A Labor Department report next week may show that private payrolls failed to grow in August for the first time in eight months, said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York.
“If capital spending does weaken further, then that raises some concerns about labor demand and whether firms want to increase hires,” said Feroli, who reckons the odds of a recession have increased in the past two weeks to about one-in- three. A decline in private payrolls “would raise some concern about whether the recovery is proceeding or not. If you see a couple of months of decline you’d be more confident that we actually were in a recession.”
Is it once again cool to be a bear? While we appreciate the sudden truthiness out of Messrs Hatzius, Feroli and LaVorgna, we hope they realize that their compensation is intimately tied in with the banks' capability of extending the ponzi, and avoiding the destructive deflation that could easily require TARP v2 to come to the scene in bailing out banks leveraged to the gills in mismarked CRE loans... although whether or not the bank rescue act passes for a second time is a far more tricky question.
h/t papa swamp