Gabelli has his own reading on the U.S. economy and he isn't opaque about it.
"The consumer has been in a recession since November 2007," Gabelli told Bloomberg News Friday. "The economy has been bolstered by exports and a few other things."
Further, Gabelli, who oversees $28.3 billion as chief executive officer of Gamco Investors, Inc., said the U.S. Congress may have to boost the economy with additional tax rebates, Bloomberg News reported Friday. Congress passed and President Bush signed a $117 billion tax rebate package earlier this year.
Gabelli's comments occurred before the U.S. Labor Department announced Friday that the U.S. economy lost another 84,000 jobs in August, with the unemployment rate rising to 6.1% -- a 5-year high. The U.S. economy has now lost 605,000 jobs in 2008 after creating just 1.1 million in 2007.
Gabelli says takeover of Fannie, Freddie needed
Further, Gabelli said the federal government must take over Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE), the U.S.'s largest mortgage financiers, as a prerequisite for housing sector recovery, Bloomberg News reported.
Economist Peter Dawson agreed with Gabelli that a consumer in defensive mode and the worst housing market conditions in about 20 years do not equate with U.S. economic health. "Gabelli is right. The technical definition of a recession is two consecutive quarters of negative GDP growth, but this economy is already in bad shape. The consumer, housing, and job growth measures signal we're in a recession, and we'll have to provide more stimulus to get out of it," Dawson said.
In addition to the U.S. Federal Reserve ensuring orderly, functioning, and liquid markets, the Federal Housing Administration, in cooperation with the U.S. Treasury, "must provide more subsidized loans to reduce foreclosures and housing price declines," Dawson said. "A big part of the return of the consumer is keeping more people in their homes, because housing is connected to so many other purchases," Dawson said. "So the sooner the housing sector is stabilized, the sooner the consumer will recover."
Economic Analysis: The U.S. taxpayer will pay a price for an increase in subsidized FHA mortgages, but the view from here is that the price to the U.S. economy of an elongated housing slump would be far greater.
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