THE BASIS POINT

NBER Says Recovery Won’t Come Until 2010

The short term trade in bonds may keep rates lower for a bit longer despite today’s Fed statement that the economy is stabilizing. The National Bureau of Economic Research said that a recovery is not likely to be called until 2010. They are the organization that officially calls these things, and their timing is debatable. On December 1, 2008 they announced the recession was official and had begun one year previously. Very, very much after the fact. So now we’re seeing their new position saying it won’t be declared officially over until next year, that supports the after-the-fact approach. Not much investment or financial planning can be made on such data, because if you’re making decisions after an official announcement, markets—whether stocks, bonds or mortgage rates—will have already priced in a recovery.