Tides of March: Did U.S. economy crest this spring?

July 18, 2011: 2:16 PM ET

Did the U.S. economic expansion wilt this past spring, allowing another recession to take root?

Gluskin Sheff economist David Rosenberg believes it did. It isn't just that the unemployment rate bottomed out in March at 8.8%. Rosenberg notes that real disposable income, household employment, real business sales and manufacturing output all peaked that month.

Before and after

Skepticism about U.S. growth is catching lately, what with Goldman Sachs and Bank of America both cutting their second- and third-quarter forecasts in recent days. UCLA economist Ed Leamer contends the recovery -- the process in which output rises faster than trend, closing the gap that opened up during the recession -- ended last summer.

But Rosenberg goes a step further, taking the second economic "soft patch" in the past year as another sign that the world's most supposedly flexible economy is stumbling toward another downturn.

"These are four critical pillars of the economy and they all peaked the same month," Rosenberg writes in a note to clients Monday. "Something tells me we are very close to a recessionary outcome here."

Of course, Rosenberg has said this before. He said last month he viewed the odds of a U.S. recession as being about 99%. But his skepticism is worth bearing in minds as other forecasters, such as BofA's Ethan Harris, continue to assume that much of the growth that went missing in the middle of this year will magically reappear in the fourth quarter.

Harris last week cut his second-quarter growth view to 1.5% from 2% and his third-quarter forecast to 2.5% from 2.9%, while boosting his fourth-quarter projection to 3.5% from 3%. Harris and others figure a Japanese economic bounce and lower energy prices will boost activity by then, and it is certainly possible that will happen. But it's hard to believe anyone can sing that song with much conviction after the downhill ride we've had most of this year.

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