‘Optimism index’ suggests recession is here

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http://www.marketwatch.com/story/optimism-index-suggests-recession-is-here-2011-08-06?dist=markets

BOSTON (MarketWatch) — Investors don’t need more bad news right now, but, even before the S&P downgrade of U.S. sovereign debt late Friday, they seemed to be cognizant it was coming.

The Investors Business Daily Economic Optimism Index dropped by 13.5% from July to August, with its latest reading representing the lowest point in the index’s 10-year history. The August reading of 35.8 — down from 41.4 last month — is roughly 20% below both its 12-month average and the reading from December 2007, when the economy entered recession.

Not surprisingly, a reading that low suggests another recession is on the way.

The monthly polling started last weekend — before Congress had sorted out the debt-ceiling dilemma — and continued after an agreement was finished, but Raghavan Mayur, president of the unit of TechnoMetrica Market Intelligence that conducts IBD’s polling, said investors’ bad mood is about more than just one or two current events.

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