Retired finance professor claims recession has ended

Just three more months until the recession is over?  That’s the prediction from a popular economic index that is forecasting an end to the recession in September with mild recovery beginning in October. 

The prediction is coming from the Economic Outlook Index, which is a product of USA Today and IHS Global Insight.

The two companies have eleven variables that are put together as part of a fancy formula.

San Diego State retired finance professor Tony Cherin calls the formula legit.  Of it’s eleven variables, seven were positive in may including stock prices.

“And to me it has not been what we call a sucker’s rally, shooting up and shooting down.  I feel there’s some stability,“ says Professor Cherin.

But Cherin isn’t ready to plan a recession goodbye party just yet.  One reason?  California’s impact on the overall economy.

Says Cherin, “We’re looking at 30 million people in this state and we’re looking at a state that is bankrupt.“

Another reason, one of the variables that was a negative contributor in may, crude oil prices.

“In my opinion if they go up too much that can have a definitely deleterious effect on the economy,“ he says.

But, beyond formulas, he says people need to feel good about spending again.

“I gotta be able to refinance the house and have equity in the house,“ says one man we talked to.

Another said, “People that I know that got laid off getting a job would be a signal to me that the economy is turning around.“

A woman on the streets of San Diego added, “Less foreclosures, probably.“

“To me it’s what the media reports.  If the media is telling me, cause I’m ignorant, don’t know what’s going on in the finance market, and is consumer spending up, but if the media tells me that’s what’s happening,“ said another man we spoke with

Cherin’s best advice, take economist predictions with a grain of salt.

“Rupert Murdoch, you’ve heard of him.  He says, ‘You know why they invented economists?  To make weathermen look good,‘“ says Professor Cherin.

By the way, Professor Cherin says he’s leaning more towards a 2010 economic recovery.