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2.7%  Q1 GDP    4.57%  avg. 30-year mortgage     9.5%  Unemployment

March Business Defaults Hit Great Depression Rates, CEO Confidence Swoons

That was a nice little four-week rally in March, and the gains it put back in your 401(k) were real, but if anyone has started thinking that the economy is out of the woods, take a look at these two sobering reports out today.

Some 35 companies defaulted in March, which marks the highest number in a single month since the Great Depression, reports Moody's Investors Service.

These are speculative-grade corporate borrowers, and a default means they can no longer meet their debt obligations. So far this year, 79 businesses rated by Moody's have defaulted.

Also today, the Business Roundtable reported that confidence in the economy among the nation's chief executives has hit a seven-year low.

The Roundtable, an organization of U.S. chief executives, runs an index of confidence, which ranges from 150 to minus-50. Any number less than 50 signals pessimism.

In the first quarter of this year, the index sank to minus-5, down from 16.5 in the fourth quarter of 2008.

What to make of this news following the March stock market rally?

Many analysts consider the March rally a bear-market rally; the most pessimistic call it a "dead-bear bounce," meaning a slight blip up the bottom before settling back down.

The strength of the March rally is one reason why it shouldn't be trusted too far -- the Dow, the S&P 500 and the Nasdaq all reported gains of more than 10 percent for the month. Such surges typically occur in bear rallies, as opposed to the steadier, smaller gains of a bull market.

-- Frank Ahrens
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By Frank Ahrens  |  April 7, 2009; 10:44 AM ET
Categories:  The Ticker  | Tags: consumer confidence, defaults  
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Comments

Who disagrees with the following prognosis? More Job Losses → Less Consumer Spending → No Change or Lower House Prices → Further Declining Consumer Confidence → Less Government Taxes Collected → Larger Government Deficits → Ongoing Recession (or worse). Not the readers of the Stock Research Portal, who reports that when he asks if he is too “pessimistic,” the result has been “deafening silence.”

Via Stock Research Portal (http://www.stockresearchportal.com)

Confidence everywhere just seems as though its crumbling.

Posted by: robsrdd | April 8, 2009 9:56 AM | Report abuse

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