Oct 22, 2012
If we take a look at the output gap in the USA we can obtain a far better understanding of the hole that the Great Recession put us in. Here are some of the ugly facts about the US economy:
That might not sound as horrible as you might have presumed. All we need to do is grow at the average nominal rate of the last 20 years and we’ll slowly, but surely get back to “normal”. There’s just one problem. The average post-war recovery lasts about 60 months or 5 years. We’re now in year three of the recovery. That means we’re nearing our “due date”. Either that or we’re dependent on 8 years of straight recovery without a recession. History doesn’t like the odds of that occurrence. The above math assumes no hiccups along the way. And history says we’re likely to see a bump in the road in the coming few years. Either that or we’d need to experience one of the longest post-war recovery periods ever. I’d call that a minor miracle given the circumstances and continuing fragility of the US economy….
This article was posted: Tuesday, October 23, 2012 at 3:09 am