Tuesday, February 24, 2009

Officially, we are looking at GREACESSION

Well, it now seems clearer and clearer that this economic period going forward is going to be very tough sledding for some time.

It might be a year or two more, it might be four or even six.

What it isn't, it is becoming clearer and clearer, is a garden variety recession, which usually lasts two to six quarters of consecutive GDP decline.

Yet, to reasonable people, all signs and current actions do not point to a "Great" Depression. The hungry 30's were characterized by unemployment in the very high teens, possibly into the mid-20s, accompanied by significant deflation. And it lasted nearly ten years. Alternative "great" depressions in other eras have featured also high unemployment, and hyper-inflation. And they also lasted for a long period. Like what Zimbabwe has been suffering through since 2000.

No, what we appear to be in for here, is a "Great Recession", a "Greacession", if you will. A period of moderate GDP decline for several years, likely accompanied by moderate deflation. Unemployment will likely settle in the range of 10-14%, and stay there for several years.

Yes, the Confused Capitalist has officially recognized that the Greacession appears the most likely outcome of current circumstances.


Remember, you heard it here first ... "Greacession"


The Confused Capitalist


Mehul Jain said...

lol, cool word coining. I agree with you. Even though most of the companies so far have reported better than expected results, the unemployment numbers will have to go down significant, to put the economy back on track!

Sierra said...

Mehul is right. Amidst the crisis, a lot of companies have been saying they are seeing a 2% growth, but the unemployment rate is still in bad shape.