Earth to economists: Recession isn't over

Last week’s stream of economic data points to the emergence of a great divide. On the positive side, annualized third-quarter GDP was up 3.5 percent compared to the prior quarter. (Keep in mind that this is an "advance" estimate from the Dept. of Commerce. Stay tuned for revisions.) But consumer spending for September fell 0.5 percent. That’s the biggest dip since December 2008 when we were in the midst of the financial crisis.

While massive government spending is behind the GDP uptick, consumers aren’t exactly in a spending mood, given an official unemployment rate that we learned this week hit 10.2 percent.

“Only economists see the recession as being over; the man on the street sees it a little differently,” sums up David Rosenberg, chief economist at Gluskin Sheff. (For the record, Rosenberg is one economist who definitely does not see the recession as over.)

Rosenberg noted that a recent WSJ/NBC News Poll reported that 58 percent of people surveyed in late October believe the recession is still on, up from 52 percent in September. That’s no surprise after hearing what Brookings Institution econ wonk Karen Dynan laid out in testimony before the Joint Economic Committee last week:

“Recent declines in asset prices," noted Dynan, "have reduced the ratio of non-pension wealth to income for the median household below the levels seen over the past quarter-century and similar to the level seen in the early 1960s.”

But here we are, rounding the corner and heading into prime holiday spending season. Compared to last November and December, when Chicken Little’s outlook seemed ominously credible, what's your spending budget looking like this year?