Few days ago I’ve posted that the recession possibly started in December with a chance 70%-80%. The final argument was that the combined commercial paper plus bank credit was in decline.

Well, I should learn for the future that one week of data is not enough. In the week of Dec 19 the banking credit jumped by $71 bln to offset the $54 bln decline in CP the same week. Feds are tight but someone is hanging around the discount window with $5 bln. Please keep in mind that banking credit is more expensive than commercial paper so the credit services charges are growing to offset the rising default risks.

That means that the credit expansion had resumed and the picture is as blurry as it was before. I downgrade the recession call for December down to 60%.