Economist Gary Shilling doesn’t see the economy rebounding until about this time next year.
He doesn’t buy the idea of green shoots advanced by Federal Reserve Chairman Ben Bernanke and others.
“It’s very normal to have at least one up quarter in real GDP in the midst of recession,” Shilling tells Bloomberg.
“Normally you get a bear market rally accompanying it. Recessions aren’t a matter of you start at the top, you go straight to the bottom, and that’s it.”
To be sure, this could be the bottom, he says. “But the odds are it’s simply an uptick in the middle of recession. We think it’s probably going to last another year.”
Why? Shilling has three reasons.
“First, house inventories. We have about 2 million extra inventories in houses as a result of the big building boom,” he says. “It’s a huge excess inventory that needs to be worked down.
Second is “the vicious circle of people retrenching,” he says.
“Consumers are retrenching. That means they spend less. … They’re on a saving spree.”
Finally, “you still have a lot of financial problems — in commercial real estate, in credit cards —to work through.
Mohamed El-Erian, co-CEO of money manager Pimco, agrees with Shilling’s view.
"With the exception of a bounce in inventories … it's not clear yet what other component of demand can grow on a sustainable basis," he tells CNBC.
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