Dr. Doom’s gloomiest message yet for the U.S economy

by Michael Tarsala

Dr. Doom is out with his gloomiest message yet: This time he says the odds of a global recession are “100!”

“Europe is already in recession,” said investor Mark Faber — aka Dr. Doom — publisher of the “Gloom, Boom & Doom Report” on CNBC’s “Closing Bell” on Thursday night. “The German economy is growing slightly and will likely go into recession soon… . “The U.S. economy has decelerated, and I don’t see much growth coming in the next six, nine, or 12 months.”

To him, it’s a matter of when — not if — the U.S. follows much of the rest of the industrialized world into recession.

Many economists and large investors believe that mre monetary easing by the Federal Reserve could help avoid recession. A third round of QE appears closer than ever, if you read the tea leaves from the FOMC.Three key statements in the minutes released this week may indicate most voting members are ready to intervene in the economy sooner versus later.

Faber, however, doesn’t think it will move the needle.

“Yeah, they can print money and maybe the S&P goes up somewhat more,”” he said. “My sense is that the market has pretty much discounted further easing already. So you would have to have massive easing — a huge balance sheet expansion — to boost the (economic) activity here meaningfully.”

If there is a “boom” among the gloom and doom, it’s U.S. corporate earnings, Faber said. He says the U.S. corporate sector has recovered “remarkably” since 2009. The number of companies that beat Q2 estimates was roughly on par with long-term averages — although revenue beats were light.

In other global regions, however, the picture is far less rosy. Faber says that sets the stage for U.S. earnings disappointments over the next six to 12 months. That could be a drag on the economy, even if the the overall earnings misses are modest, he says.

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Photo by: Mike Lawrence