Article Source: Consumers say they're gloomy, but why are they still spending? A surprising report from the Commerce Department today, which indicated that seasonally adjusted nominal sales for retail trade and food services were 1% higher in May compared with April. The new estimates of March and April sales (in red in the figure below) were also revised substantially up from the previous (blue) estimates that had been reported last month. Source: ALFRED Although a 1% monthly gain would translate into a 12% annual rate if maintained, the newly revised April numbers are still barely above the values last November in nominal terms. Calculated Risk notes that the year-on-year comparisons, when adjusted using an anticipated PCE deflator, remain negative even with the strong new estimates. Source: Calculated Risk The latest numbers ...

Too severe, or not too severe; that is the question.

I’m talking about the U.S. recession that we’re already in, about to be in, or hoping to avoid.

At this point it depends a lot on how you approach the subject, but assuming for a moment that recession is inevitable, analysts and economists are asking: How much will growth contract? Can Mr. U.S. consumer muddle through, or will he stumble and fall? And how much have financial markets already discounted an official recession?

Today, I’ll answer these questions and tell you what to expect in the currency markets, namely the U.S. dollar. First, let’s address …

HOW to Identify a Recession

Unfortunately, pinpointing the magnitude and velocity of a recession before it has ended isn’t as easy as measuring the change in …