by Calculated Risk on 10/30/2006 10:07:00 PM

In mid-August, Dallas Fed President Richard Fisher said:

"I expect second-quarter GDP growth to be revised upward to closer to 3 percent. And my best guess one month and two weeks into the third quarter is that the speed at which we are now proceeding is roughly of that magnitude. From my vantage point, despite what you hear from some of the Eeyores in the analytical community, a recession is not visible on the horizon."

Of course we've been having fun with Fisher's Eeyore remark ever since. It was Professor Duy who, after Fisher's speech, first jokingly called Dr. Roubini the "archetypical Eeyore".

And of course those Eeyores in the analytical community have been correct so far.

Here is some more from Dr. Roubini: Another Recession "Canary in the Mine": Wal-Mart Sales Flat in Spite of Lower Oil Prices. A short excerpt:

One of the latest variants of the optimists' soft-landing view is that the weakness in economic growth in Q3 was driven by the spike in oil prices during the summer. Now that oil prices are 25% down relative to the summer peak, the extra income in the pocket of consumers will be spent driving a rebound of consumption and growth in Q4 and 2007. So, now "low" oil prices will come to rescue the US consumer.

It is too bad that this fairy tale has a very week base of support. This weekend Wal-Mart reported on its same store sales for October so far; and guess what: they are as bad as they were in December 2000 at the very outset of the last US recession.

And from Dr. Krugman (NDN’s James Crabtree notes from speech, hat tip: Mark Thoma):

In general economic terms we are off the map - in two ways on (1) housing and (2) the trade deficit. Because we are off the map, we are struggling to use our fundamental understanding of economics, and some dubious number crunching, to make sense of a situation that doesn’t look like anything we’ve seen before.
...
So here is the economic problem. We have a big trade deficit and a highly inflated housing sector. One result has been that we’ve lost a lot of manufacturing jobs – which are tradable – but we’ve made that up in domestically orientated employment. (Among other things this has included a 50% increase in real estate jobs.) Eventually this will slide back, and we’ll see more jobs in manufacturing if exports pick up. The thing is that the transition will be unlikely to be smooth.

Eeyore lives!