New York Times (Sun March 1) asked 11 economists to predict when the recession will end. I have whittled down their explanations to the bare bones, and omitted names to save time (if you want names let me know).
“…bear market ends when investors give up hope …misplaced hope prolongs recessions … [because people] resist making necessary adjustments. Before you know it [things] will be on their way back – just don’t ask when.”
“…a statistical rebound in the second half of 2009 would not be shocking …driven by the gyrations of the inventory cycle …or the stimulus package…” Consumer are shocked into frugality …[and] are likely to be restrained for years to come. The consumption share of GDP …is not strong enough to keep unemployment rate from rising …this recession won’t end until late 2010 or early 2011.”
“Global growth is approaching zero …it will take [a longer] time for consumers and companies to pay off debt. Governments and central banks are the only sources of credit [and] liquidity. If governments [act quick] …we will probably have an unusually long and deep recession through 2010.”
“The self-correcting nature of markets will ultimately prevail …monetary policy is extraordinarily expansionary …the recession will end in the second half of this year [2009] …efforts to help distressed homeowners …will prevent housing from contributing to the recovery.”
“…by the late summer our economy will start to show signs of life …By the end of the year [2009] we may see some growth… In early to mid 2010 consumers [will take] advantage of the once-in-a-lifetime economic opportunities…”
“…crisis is biggest in recent history …[but] surprisingly ordinary. Let’s assume that the magnitude of the credit correction phase will mirror that of the credit inflation phase. So when did the credit bubble begin? …mid-1980’s… or… the turn of the millennium [?] …by the first measure we may see two or more decades of readjustment …by the second, we are still probably in the early stages …meaning that while the technical recession could be over by the end of the year [2009], the broader credit cycle will likely remain a significant drag [on the economy] well into the next decade.”
“If it turns out to be as bad as the most protracted of the post war downturns, we will touch bottom next month. The depression [sic] …did not hit it’s nadir until 43 months later …Japan suffered a “lost decade”, when the rest of the world was doing well …two consecutive years of contraction …two more lean years after that.
“…growth will return in the fourth quarter of this year [2009]. Housing must hit bottom at some point …homebuilding …will add a full point of growth. Auto sales are also not likely to keep falling …[the] economic stimulus should add more than 5 percent to real [GDP] over two years …the bill …for imported oil fell by about $300 billion a year.
“…the probability of leaving a recession once you are in one …is about 8% [a month]. The decline in employment is above average for past recessions, but smaller than 1960-61 and 1981-82. Industrial production …[has] slowed more than average …but not nearly as much as the 1973-75 recession …drop in personal incomes has been below average …the odds of this recession lasting into the fourth quarter of 2009 are 50%.”
“A better metric is the length of time it takes the economy to recover to the level of the per capita income at its prior peak …the [US] economy has taken an average of four years to return to its previous peak in personal income. After the Depression it took the United States 10 years …it was not a design flaw that the stimulus plan extends over several years…”
So there we have it. Looks like the consensus is somewhere on the time line of 2009, possibly well into 2010, with slow growth for some years to come.
[quote=qwerty007]Come one, this has got to be more important than LCDs and hand guns.[/quote]
Nope. Well, yes on hand guns, but no on TVs. We know that most economists don’t have a clue. So listening to their consensus is amusing, and helpful in analyzing how markets might move next week, but doesn’t tell you much about what the economy or markets will be doing a year from now.
[quote=qwerty007]Come one, this has got to be more important than LCDs and hand guns.[/quote]
Nope. Well, yes on hand guns, but no on TVs. We know that most economists don’t have a clue. So listening to their consensus is amusing, and helpful in analyzing how markets might move next week, but doesn’t tell you much about what the economy or markets will be doing a year from now.
[quote=qwerty007]Come one, this has got to be more important than LCDs and hand guns.[/quote]
Nope. Well, yes on hand guns, but no on TVs. We know that most economists don’t have a clue. So listening to their consensus is amusing, and helpful in analyzing how markets might move next week, but doesn’t tell you much about what the economy or markets will be doing a year from now.
[quote=qwerty007]Come one, this has got to be more important than LCDs and hand guns.[/quote]
Nope. Well, yes on hand guns, but no on TVs. We know that most economists don’t have a clue. So listening to their consensus is amusing, and helpful in analyzing how markets might move next week, but doesn’t tell you much about what the economy or markets will be doing a year from now.
