L O N G Recession

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The WSJ on the current recession, on track to be one of the longest ever”

“The current U.S. recession, with no end in sight, threatens to be the longest since 1933, and that helps explain why investors are having so much trouble gauging the stock market.

Models developed in the more normal times of the past few decades, based on things like corporate-profit forecasts, the interest-rate environment or the length of the average recession, have failed in the current, exceptional economy. Many have signaled that stocks were cheap and it was time to buy, but stocks kept falling and got cheaper.

Since the Great Depression, only two recessions have run longer than this one, the first ending in 1975 and the other in 1982. Each lasted 16 months, according to the National Bureau of Economic Research, the government-designated recession tracker.”

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Source: Rebound Wrinkle: Recession E.S. BROWNING WSJ, JANUARY 5, 2009 http://online.wsj.com/article/SB123110449873552059.html


Originally published at The Big Picture blog and reproduced here with the author’s permission.

One Response to "L O N G Recession"

  1. Alex Sinclair   January 9, 2009 at 12:52 pm

    The normal engine for a recovery involves interest rate sensitive sectors and they are not going to help until 2010 or 11. Housing, autos, capital spending, commercial construction will be generally weaker throughout 2009. Autos is the only one with a chance of being steady, capital spending budgets have been cut and commercial construction will be a disaster. Housing construction will not improve until late 2010 at the earliest.The recovery will be after 2009. Fiscal stimulus of $400 billion per year with much of it delayed into 2010 will only slow the decline. This will be the longest and deepest recession since the depression. Japan spent the equivalent of $1.3 trillion per year (10% of GDP) as stimulus and it did little good and they ended up with a debt burden second to no advanced economy. They gave away their future.