By Matthew Benjamin
June 30 (Bloomberg) -- The current recession has created at least one growth industry: use of the phrase “green shoots.”
Since Federal Reserve Chairman Ben S. Bernanke first uttered the words almost four months ago to describe signs of a thaw in frozen credit markets, instances of the botanical metaphor in the press have climbed sevenfold. A Google search for “green shoots” returns 4.86 million hits.
“These may be the two most overused and annoying words of my investment career,” said John Mauldin, president of Millennium Wave Advisors LLC in Arlington, Texas. “Every possible sign of a recovery is anointed with the phrase.”
Declining interest rates on mortgages and business loans led Bernanke to say on the March 15 CBS News program “60 Minutes” that he detected “green shoots” in some financial markets where the Fed had acted to restart lending. The locution appeared 3,123 times in news articles last month, up from 436 in February, according to research by Japanese brokerage Nomura Holdings Inc.
Both bears and bulls have pressed the phrase into service.
Jim O’Neill, the chief economist at Goldman Sachs Group Inc., said April 27 that the green shoots of global economic recovery are “turning into daffodils,” when he upgraded his forecast for 2010 world growth to 3.2 percent from 2.8 percent.
‘It’s Moss’
“Housing is still a drag on the economy,” David Coard, head of fixed-income trading in New York at Williams Capital Group, a brokerage for institutional investors, said May 26. “It may be green shoots, but they are growing slowly. It’s moss.”
Billionaire investor Warren Buffett joked June 24 that he had yet to see any green shoots, adding that his eyesight may be to blame.
“We’re not seeing them,” Buffett said on CNBC. “I had a cataract operation in my left eye about a month ago and I thought, maybe now I’ll be able to see some green shoots.”
Bernanke’s tendrils of economic hope have been compared with trees and mold. They have been said to be on the verge of blossoming, as well as in danger of withering, browning and succumbing to frost.
Nouriel Roubini, the New York University economist referred to as Dr. Doom for predicting the current crisis, enlisted the phrase to temper budding optimism about the economy.
“People talk a lot about these green shoots,” Roubini said June 22 in Paris. Yet looking at the economic data, he said, “I see more yellow weeds than green shoots.” Instead, he predicted the recession in the advanced economies would last another six to nine months.
Beyond Economy
The phrase has also spilled over into non-economic realms.
In a June 28 column on the Israeli-Palestinian conflict, Washington Post writer Jim Hoagland said, “Green shoots of peace are glimpsed in some quarters.” A June 21 entry on the Daily Kos blog about Iranian demonstrations carried the title “The Green Shoots of New Peace.”
While Bernanke may be identified with the phrase, he isn’t the first to use it. During the early 1990s recession, Britain’s former Chancellor of the Exchequer Norman Lamont declared that “the green shoots of economic spring are appearing once again.” That comment came back to haunt Lamont when growth failed to appear for months.
Accurate or not, Bernanke’s resurrection of the expression may have done some good this time around. Consumer and business confidence measures improved as it proliferated in the media, according to data compiled by Bloomberg.
‘Grip on the Public’
As “catch-phrases go, I can’t recall another business- related one that has had such a grip on the public,” said Bernie McSherry, a senior vice president at Cuttone & Co., one of the largest floor brokerages at the New York Stock Exchange. “Since green shoots don’t remain mere shoots forever, it’s time to retire the phrase and replace it with something indicative of where the economy is today.”
The term is “overused, not to mention overrated,” said David Rosenberg, chief economist and strategist at Gluskin Sheff & Associates in Toronto. “It is more a comment on the human condition and the innate need for optimism” than an accurate description of the economy and markets, he said.
A substitute phrase may also be needed if the U.S. economy slows down again later this year, said Rosenberg, the former chief North American economist at Merrill Lynch & Co.
“We will not very likely see ‘brown manure’ as the catchy horticultural replacement to green shoots,” he said.
To contact the reporter on this story: Matthew Benjamin in Washington at mbenjamin2@bloomberg.net.
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