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Economists' optimism for end of slump not catching

San Diego Union-Tribune--At an investment conference hosted by San Diego stock analyst Bud Leedom last week, economist Esmael Adibi boldly pegged a date for the end of the recession.

“The recession will end precisely on Sept. 8,” Adibi, an economist at Chapman University in Orange, told 280 investors and corporate executives at the Southern California Investor Conference in Newport Beach.

Adibi's track record includes predicting a “devastating” housing crash in 2005 and announcing in December 2007 that the current recession had begun — long before other economists reached the same conclusion.

He was joking about the recession's ending date — Sept. 8 is his birthday — but Adibi does think the economy will start growing next month.

“We're almost out of the recession now,” Adibi said.

Adibi's joke reflects a growing sense of optimism among economists that we are on the verge of pulling out of our two-year slump. Within the past several days, such groups as Wells Fargo Securities, BMO Capital and The Conference Board estimated that the gross domestic product will grow this quarter, which they believe could spell the end of the recession. Wells Fargo, which maintains that the recession ended in June, predicts that the GDP will rise 3.4 percent this quarter and 2.6 percent next quarter.

But if the GDP is growing — driven partly by federal infrastructure projects and subsidized auto sales — does that mean the recession is over? Not necessarily.

The GDP is only one measure for judging economic health. It can turn positive even in the midst of a recession, as happened during spring 2008. In addition to the GDP, the National Bureau of Economic Research looks at employment levels, salary growth, corporate profits and other factors to determine whether the country is in recession. Most of those still paint a gloomy picture of the economy.

“I think (the) GDP will be positive this quarter, but it's a matter of debate whether that signals the end of the recession,” said Alan Gin, an economist at the University of San Diego. (Full Story)