Respite R.I.P.!

If you've been reading me this year, you know I have made a few highly contrarian calls that turned out to be correct. Most importantly, that after picking up early in the year, demand destruction during the recession that I already believed was happening, would cause inflation to fade strongly later in the year. As a corollary to that, when others were counting the days until $130 a barrel oil would hit $200, I called it a top, and started a Countdown to $100 Oil that turned out to be too tame! I also was among the first on the blogosphere to note that China's bubble was bursting and that the recession would go global, and that the markets feared deflation.

But there is one call I made over a year ago which now can be given a well-deserved burial: the notion that there would be a "respite" in the ongoing "slow motion bust" at some point before the end of 2008.

Hints of a year-end economic respite?

The recession is here (and has been since last December). It's going to hang around for a while longer at least. And layoffs and unemployment are almost certainly going to continue to increase right through election day, which is bad news for the people who will lose their jobs, but at least has the silver lining that it will increase the chances of Democrats doing very well indeed this November.

That being said, like seeing the green shoot of a crocus popping up above the ground at the end of January, I am seeing the first nascent signs that the economy may enter a period of respite by the end of this year, either growing very slowly or at least the pace of contraction slowing down to a crawl.