Gluskin Sheff economist David Rosenberg calls current economic conditions "a depression, and not just some garden-variety recession," and notes that any good news both during the initial 1929-33 recession and the one that began in 2008 triggered "euphoric response." The 1929-33 recession saw six quarterly bounces in GDP with an average gain of 8%, sending the stock market to a 50% rally in early 1930 as investors thought the worst had passed. "False premise," Rosenberg said. "And guess what? We may well be reliving history here. If you're keeping score, we have recorded four quarterly advances in real GDP, and the average is only 3%." Rosenberg's warning comes as a slew of major analysts — Goldman Sachs and JP Morgan among them — have slashed GDP projections for 2010 to the 1.5% - 2% range. Chicago Federal Reserve President Charles Evans said in a speech that the risk of a double-dip recession has escalated. He said government programs to help distressed homeowners have been ineffective and aren't helping the pivotal housing sector recover. The dour outlooks come on the same day that the National Association of Realtors said home sales reached a 15-year low in June 2010, dousing hopes that the industry had reached a bottoming point. Rosenberg points out that the "overall economic malaise" has come despite aggressive efforts by the Federal Reserve to stimulate the economy through rate cuts. The central bank itself has scaled back its economic projections, has held steady on its balance sheet, and could be announcing another round of quantitative easing measures at its Jackson Hole summit. "How's that for a reality check," Rosenberg said. "It's not too late, by the way, to shift course if you have stayed long this market."
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