Are we in danger of a double dip recession?

Some of the banking intelligentsia are also suggesting that the stock market is excessively high and that gold will hit $2,000 in the near future. Given that these folks got it all wrong before, we can dismiss their views.

Let us not waste our time on trough to peak statistical comparisons of volumes and instead focus on the changes that are pointing to the end of the recession. In both the Transpacific and the Asia to Europe trades we have seen consistent growth in volumes on a month on month basis for the past five months. This is clear proof that there is a change in the business cycle.

August volumes, in the midst of the holiday season, were up on July. Much of this trade growth is the result of the end of the inventory de-stocking and the need to re-stock. Add to that the increase in new house building, particularly in the US. Consumer expenditure is not there yet, but it will come, slowly, in the next few months.

What about the double dip? Are there signs of a downswing? There are no solid indicators that suggest a further economic downturn is coming.

What we are seeing is a surge in growth (if it can be called that) driven by the industrial rebound in both Europe and Asia that has increased exports. This is being followed by a slowdown in growth before we see the next hesitant steps of growth coming from the consumers as they begin to feel more confident about their assets and their jobs which in turn will lead to a slow reduction in the savings ratio and increased consumption.

Growth will be slow for the rest of this year but it will continue into 2010. Ports, despair not.