In a Daily Ticker Interview with Henry Blodget, economist Gary Shilling makes the case the US is already in recession.

"We've had three consecutive months of declines in retail sales," says Shilling, president of A. Shilling & Co., an economic research and forecasting firm. "That's happened 29 times since they started collecting the data in 1947, and in 27 of the 29 we were either in a recession or within three months of it."

Shilling expects this recession will last about a year and shave about 3.5% from growth from peak to trough.

This time is different, says Shilling "because a lot of things that normally go down in a recession are already there, like housing." And policies that normally help revive the economy are absent. The Fed can't cut interest rates because they're already near zero and the housing market won't be a catalyst for growth, Shilling says.

Before the last presidential election Shilling said that whoever got elected then wouldn't get re-elected because the economy would still be weak with high unemployment.

Now Shilling says he'd like to see one party in control in Washington because it increases the odds of cuts for entitlements and could help "restore confidence in Washington." But even then he says it will take five to seven years to complete the deleveraging that's already underway before the economy recovers.

Case for Recession

On June 21, I made the case 12 Reasons US Recession Has Arrived (Or Will Shortly)

On July 11, I wrote Case for US and Global Recession Right Here, Right Now; Recognizing the Limits of Madness; Permabears?

More QE is Pointless

While everyone is looking for another round of QE, on August 1, I explained Another Round of QE is Pointless.

Would Another Round of QE Help?

Everyone is looking for the Fed to do something.

I have to ask what good could it possibly do? Yield on the 10-year treasury is about 1.5%. Would it make any difference to businesses if it was 1.25% or even 1%?

I suggest additional monetary stimulus would not do anything to spur job creation and it would continue to punish those on fixed incomes.

An additional round of QE could ignite a further rally in equities (already in bubble land). However, one of these QE moves by the Fed will blow sky high, and with equities priced beyond perfection, the next round of QE may be the one.

Timing the Recession

Shilling thinks the recession started in the second quarter. Obviously, I agree.

It will be interesting to see when and where the NBER places it.