Rouhini’s recession call is based on a repeat of what happened to GDP in the last recession. We went from 5.6% in Q1 to 2.9% in Q2. He expects this slowdown to continue, so that by Q1 07, this GDP growth is negative. This same trend happened in 2000: we went from approx 5% to approx 2% growth qoq, and then the next quarter we had negative growth. It took only 2 quarters to move from over 5% GDP growth to negative GDP growth. I was also surprised that it can happen that quickly.
A recession is negative qoq growth in GDP for at least 2 quarters.
I agree that the slowdown will exacerbate after the recession offically begins, so this is probably going to be one of our longer recessions.
