Forcast: Continued Hard Times

Some analysts are trying to make the case that the recession has bottomed out—and things can be expected to slowly but steadily improve.  Sorry—not very likely.

A recent International Monetary Fund [IMF] study of recessions certainly provides support for this pessimistic view.  The IMF examined the recession experiences (122) of the more advanced capitalist countries (21) over the last 50 years.

It found that recessions associated with a financial crisis were deeper and longer than recessions associated with other shocks.  It also found that highly synchronized recessions (those involving 10 or more of the advanced countries) were deeper and longer than those limited to one region.

Drum roll for the conclusion:  “Recessions that are associated with both financial crises and global downturns have been unusually severe and long-lasting.”  And, that is the kind of recession we are experiencing now.  In other words, don’t expect any kind of reversal before the end of next year at best; and a weak recovery after that.


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