CNBC’s Faber Assumes Recession Inevitable

Photo of Jeff Poor.
By Jeff Poor | January 7, 2008 - 17:25 ET

Got some hot stock plays for 2008? CNBC's David Faber thinks you should factor in the recession that hasn't yet happened when you adjust your portfolio for this New Year.

CNBC "Squawk Box" contributor Faber warned investors on the January 7 "Squawk on the Street" that stocks reliant on business spending could hurt since a recession, he said, is imminent.

"Business spending, concerns about business spending overall. I think Anne Mulcahy [CEO] at Xerox (NYSE:XRX) may have said something about business spending," Faber said. "I'm hearing business spending slowing. That's the concern - what happens to the stock market in a recession because we're heading into one it looks like."

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But, the criteria for a recession is still "a period of general economic decline; specifically, a decline in GDP [gross domestic product] for two or more consecutive quarters" - none of which shows signs of happening.

However, not everyone thinks we're on a collision course with a recession, and basing decisions about your financial portfolio based on that assumption could be a mistake.

"We remain confident that neither a recession, nor any significant consumer slowdown, is in the cards," Brian Wesbury and Robert Stein, economists for First Trust Advisors, L.P., wrote on January 7. "The Fed is not tight, tax rates are still low, productivity is still strong, wages, incomes, and profit margins are still robust, and, after revisions, the US economy has proven its resilience time and time again."

For the last two quarters, GDP (as reported by the U.S. Commerce Department) has grown at a rate of 3.8 percent in the second quarter of 2007 and 4.9 percent in the third quarter - not a sign of a recessionary trend.

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A recession has been

January 7, 2008 - 17:28 ET by mattm

A recession has been imminent since 2004. 

Not to nitpick...

January 7, 2008 - 21:00 ET by Boraxxarob

But reading the headlines, the US has been teetering on the brink of recession (if not FAR worse), since nonn (EST) January 20, 2001.

That's what all the major news outfits have been saying.

But, then again, they are very certain that prosperity will occur at noon (EST) January 20, 2009. Right?

By the time we know we are

January 7, 2008 - 17:35 ET by CapitalismRules

By the time we know we are in a recession, we will be out of it.  But there are more signs of Bigfoot than a recession at this point.  Again, the MSM keeps trying to get a democrat elected, the economy is the new Iraq- as long as there are idiots out there who agree with them, they'll keep finding them and making them experts.

And if we do go into a

January 7, 2008 - 17:52 ET by rbosque

And if we do go into a recession? So what. It happens in a market economy. And if it happens after Bush leaves the WH- they'll blame it on him anyway.

What these leftist jerks want is a permanent recession as a socialist nation.

There will be a recession...

January 7, 2008 - 18:22 ET by Hermano

Eventually. At some point, there will be two consecutive quarters of GDP decline. The most likely cause, tax increase. Hopefully not after the next election.