The excerpt below is from Liaquat Ahamed in Lords of Finance, writing about September 1929. It reminded me a little bit of today’s situation where stocks are close to highs, there is some positive economic data mixed with weak economic data, and you have some commentators with decent track records predicting we’re in a recession already while others thoroughly dismissing that claim. The excerpt below followed a discussion of the back and forth between Roger Babson (who was very bearish on the market) and Irving Fisher (who was very bullish on the market).
“The official chronicler of business cycles in the United States, the National Bureau of Economic Research, a not-for-profit group founded in 1920, would declare, though many months later, that a recession had set in that August. But in September, no one was aware of it. There were the odd signs of economic slowdown, especially in some of the more interest-rate-sensitive sectors—automobile sales had peaked and construction had been down all year, but most short-term indicators, for example, steel production or railroad freight car loadings, remained exceptionally strong.
By the middle of the month, the market was back at its highs and Babson’s forecast of a crash had been thoroughly discredited. The broader indices even set new records—for example, the most widely used measure of the market, the New York Times index of commons stocks, reached its all time peak on September 19—though the Dow never did get quite back to 381.”