Early Retirement Blog

Mama’s Says The Recession is Over!

While economists who couldn’t predict the economic collapse, spend their time studying dubious government data to figure out if the recession is over, I use a much more accurate indicator of economic conditions to make my determination.   The line outside Mama’s Restaurant.

Mama’s is a very popular brunch spot located in North Beach San Francisco, the neighborhood where I live and work.   Before the recession started, the line of people standing outside Mama’s, waiting to get in to eat eggs and toast, would stretch 20 to 40 deep.   When the recession began, the line outside Mama’s restaurant slowly dwindled until on many days, there would be no line at all.

Starting about two months ago, I noticed   the line outside Mama’s began to grow again,   and in the past couple of weeks, the line of hungry patrons went back to it’s pre-recession level.   Mama’s says the recession is over.   Do you have a similar recession indicator?

Is the recession really over? Or, is the line outside Mama’s a temporary phenomenon, and soon you will be able to once again walk right into Mama’s and grab any table?

I’m still sticking to my prediction, made last August, that a double dip recession will occur starting the second quarter of 2010.   President Obama, Tim Gheitner, and Ben Bernanke will do everything they can to try and hold off re-entry into recession until after the 2010 Congressional mid-term elections.   And with their ability to cook books, and manipulate markets, they may succeed.

However, nothing has fundamentally changed in the economy, that alters the inevitability of a double dip recession.   Why?   The housing market, the growth engine for the U.S. economy, is slowly being taken off life support.   The Federal Reserve has announced that they will no longer be buying mortgage backed securities.

The rest of the world learned the painful lesson, gained during the economic collapse, that U.S. housing is a lousy investment and no longer buys U.S. mortgage backed securities.   The Federal Reserve is the only investor left buying U.S. mortgages.   Once the Federal Reserve stops buying U.S. mortgages, housing will collapse again, and U.S. economic growth will end, and the double dip recession will begin.

So, if you want to eat brunch at Mama’s, but hate waiting in line for an hour for a plate of eggs and toast, wait a few months and you will be able to walk right in and grab any table.

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