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US Recession

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Lakshman Achuthan and Harm Bandholz say the recession will proba. Media Coverage - Mozilla Firefox. Leading Probability of a US recession. Asia: The Coming Fury. Forecasted GDP in the New Year. The description of the consensus that growth will resume around mid-year — while accurate — does not convey much information about what is the consensus regarding the depth of the recession. Nor does it convey the degree of disagreement regarding the timing and strength of the recovery. To provide some insight , here is the mean forecast for GDP into the new year, according to the WSJ’s December survey. Figure 1: Log real GDP, from 25 Nov 08 preliminary release (blue), potential GDP (black), WSJ mean forecast from December survey (red), high and low forecasts (teal), and third highest and third lowest forecasts (green).

Source: BEA NIPA release [link], CBO estimates of 9 Sep 08 [xls], WSJ survey of forecasters from December [link]. The mean forecast indicates a recovery (i.e., resumption of positive growth) starting in 2009Q3. Signs of a thaw. Yes, I saw the discouraging headlines.

Signs of a thaw

But I also see signs of hope in last week’s economic news. Let me begin by acknowledging the awful employment news. This was undeniably grim, though popular descriptions that BLS had reported the biggest job loss in any calendar year since 1945 are perhaps unnecessarily alarmist. Population growth would naturally mean that both job gains and job losses would be expected to be bigger absolute numbers than they used to be, and there’s no special reason to look at calendar years rather than all 12-month intervals. The graph below shows that in percentage terms, the employment decline so far is similar to what we see in a typical recession. But my primary concern has not been unemployment per se but instead the dysfunctional financial market that produced it. The Residential Rental Market. By Bill McBride on 1/09/2009 02:47:00 PM Yesterday I linked to an article in the Los Angeles Times about declining residential rents: Housing downturn hits L.A.

The Residential Rental Market

-area rents There are several different factors impacting rental supply and demand - and therefore rents - for residential properties. Roubini: Two Year Recession. 2009 will be the nightmare on Main Street. Every economist is predicting a macabre 2009, but no one knows for sure how bad things will get or who will survive.

2009 will be the nightmare on Main Street

This column, by comparing the current crisis to uncertainty shocks of the last 40 years, predicts GDP growth could be reduced by as much as 4.5%. But, if politicians protect free markets, growth should be back in 2010. January Economic Summary in Graphs. Here is a collection of 20 real estate and economic graphs from January ...

January Economic Summary in Graphs

New Home Sales in December Click on graph for larger image in new window. The first graph shows monthly new home sales (NSA - Not Seasonally Adjusted). Notice the Red columns for 2008. Christina Romer Explains Stimulus Plan. Willem Buiter’s Maverecon. Economic policy is based on a collection of half-truths.

Willem Buiter’s Maverecon

The nature of these half-truths changes occasionally. Economics as a scholarly discipline consists in the periodic rediscovery and refinement of old half-truths. Little progress has been made in the past century or so towards understanding how economic policy, rules, legislation and regulation influence economic fluctuations, financial stability, growth, poverty or inequality. We know that a few extreme approaches that have been tried yield lousy results – central planning, self-regulating financial markets – but we don’t know much that is constructive beyond that.

The main uses of economics as a scholarly discipline are therefore negative or destructive – pointing out that certain things don’t make sense and won’t deliver the promised results. Much bad policy advice derives from a misunderstanding of the short-run and long-run impacts of events and policies. Good news at last? The recession will be over sooner than you th.

A key source of the today’s economic weakness is uncertainty that led firms to postpone investment and hiring decisions.

Good news at last? The recession will be over sooner than you th

This column, by the authors whose model forecast the recession as far back as June 2008, report that the key measures of uncertainty have dropped so rapidly that they believe growth will resume by mid-2009. This means any additional economic stimulus has to be enacted quickly. Europe does not face deflation danger. Assessments of European price stability risks outright reversed in recent months.1 Until summer 2008, monetary policy was concerned with inflation pressures from surging commodity and energy prices.

Europe does not face deflation danger

Last month, facing possible recession, the European Central Bank (ECB) cut interest rates by an unprecedented 75 basis points. Falling commodity prices and weak demand have eased inflation. All major economic organisations found forecasting growth and inflation difficult and uncertain in 2008. “There’s every risk of an overshoot” - Mozill. Because of the bloated monetary base there has been much concern recently about the supposed risk of future inflation.

“There’s every risk of an overshoot” - Mozill

There are at least four important misconceptions associated with this issue, and I’ll try to address all four in this post. The first misconception is that it will be difficult to pull the excess reserves back out of circulation after the economy recovers and interest rates rise to a more normal level. As Hall recently pointed out, if we continue to pay interest on reserves it would not be necessary to pull those reserves out of circulation in the future, just pay enough interest for banks to want to continue holding them.

Banerji: The End of the Recession. This post appeared yesterday on RealMoney.

Banerji: The End of the Recession

Click here for a free trial, and enjoy incisive commentary all day, every day. The end of this recession -- the most severe downturn since World War II -- is finally in sight. This is the clear message from Economic Cycle Research Institute's array of leading indices of the U.S. economy. What are these indicators? One is the ECRI's U.S. The growth rate of the USLLI turned up in November 2008 and has now advanced for four straight months. Therefore, the economy is on the cusp of a growth rate cycle upturn -- i.e., a cyclical acceleration in economic growth. Media Coverage. Unnamed. Employment Declines Sharply, Unemployment Rises. By Bill McBride on 1/09/2009 08:30:00 AM From the BLS: Nonfarm payroll employment declined sharply in December, and the unemployment rate rose from 6.8 to 7.2 percent, the Bureau of Labor Statistics of the U.S.

Employment Declines Sharply, Unemployment Rises

Department of Labor reported today. Payroll employment fell by 524,000 over the month and by 1.9 million over the last 4 months of 2008. In December, job losses were large and widespread across most major industry sectors. Over 8 Million Part Time Workers. By Bill McBride on 1/09/2009 09:01:00 AM From the BLS report: Boeing to Cut 4,500 Jobs. Q4 Preliminary Release and Re-thinking That "Massiv. The BEA released its preliminary numbers for 2008Q4 GDP. There was little good news in it, as many have observed. [0], [1], [2], [3] Consumption fell even further than first estimated. February Economic Summary in Graphs. Here is a collection of 20 real estate and economic graphs from February ... Click on graphs for larger image in new window.

New Home Sales in January The first graph shows monthly new home sales (NSA - Not Seasonally Adjusted). Note the Red column for January 2009. Another Look at the Collapse of. A New Depression? The Lessons of the 1930s. Now that Janet Yellen is to be Chair of the US Federal Reserve Board, attention has turned to the candidate to succeed her as Vice Chair. Media Coverage - Mozilla Firefox. Media Coverage - Mozilla Firefox. Roubini: End of Gloom?

Media Coverage. Philly Fed: Manufacturing "contracted less seve. This shoot is definitely growing bigger and greener. Further progress for initial claims for unemploymen. Are We Turning Japanese?: The Balance Sheet: Online Only: The Ne. Will the credit crunch lead to recession? Krugman Worries about L-Shaped Recession - Mozi. By Bill McBride on 4/26/2009 10:15:00 AM.