When the hell will the recession be over?
- Thread starter La Roche
- Start date
Never!
At least not in my lifetime, likely not in yours.
We are well on the way into a new extended Dark Age.
La Roche said:
At least not in my lifetime, likely not in yours.
We are well on the way into a new extended Dark Age.
Some matters to keep in perspective
According to the recent figures I obtained from Statistics Canada, the current unemployment rate here in Canada stands at 8.4%, with much of the unemployment due to loss of manufacturing jobs here in Ontario (the unemployment rates in other provinces is pretty much unchanged, and even increased in Manitoba, Saskatchewan, and Nova Scotia).
This figure is far below the unemployment rates during past recessions during the 1980s and 1990s (for perspective, the unemployment rate in Canada in 1983 and 1992 was 11.9% and 11.3%, respectively). And the unemployment rate here in Canada is lower than the overall unemployment rate in the US, which last I heard stood at 9.2%.
So the point I am trying to get across is that, as bad as this recession may appear from the headlines, the situation is not quite that dire.
As for when this recession could end, IMHO we should look for a number of factors, such as greater consumer confidence, greater ability for companies to obtain private capital, stabilization of home prices (at least in the US). Since this recession began with the seizing up of the credit markets, I suspect that it would taken at least a few years before we start to see pre-recession employment figures, as people and businesses are rebuilding their savings.
So you can take all of that for what it's worth.
Samurai Joey
According to the recent figures I obtained from Statistics Canada, the current unemployment rate here in Canada stands at 8.4%, with much of the unemployment due to loss of manufacturing jobs here in Ontario (the unemployment rates in other provinces is pretty much unchanged, and even increased in Manitoba, Saskatchewan, and Nova Scotia).
This figure is far below the unemployment rates during past recessions during the 1980s and 1990s (for perspective, the unemployment rate in Canada in 1983 and 1992 was 11.9% and 11.3%, respectively). And the unemployment rate here in Canada is lower than the overall unemployment rate in the US, which last I heard stood at 9.2%.
So the point I am trying to get across is that, as bad as this recession may appear from the headlines, the situation is not quite that dire.
As for when this recession could end, IMHO we should look for a number of factors, such as greater consumer confidence, greater ability for companies to obtain private capital, stabilization of home prices (at least in the US). Since this recession began with the seizing up of the credit markets, I suspect that it would taken at least a few years before we start to see pre-recession employment figures, as people and businesses are rebuilding their savings.
So you can take all of that for what it's worth.
Samurai Joey
Samurai Joey said:
Would suggest that the lack of unemployment is actually comprised of an increase in the civil service (which is totally dependent upon a strong private sector) and the "hidden" unemployment of contract workers, or people that are working p/t under contract and therefore do not show up as unemployed, despite their contracts drying up. They are not eligible for UI and don't get counted by the system.
That is certainly possible (if not perhaps even plausible); however, I do not see how the situation would have been any different during the 1990's recession, since there were certainly many contract workers with their contracts being terminated at that time as well (I am not as certain about the 1980's on this point).
And therefore the "actual" unemployment rate (taking also into account discouraged workers who have dropped out of the labour force), the unemployment rate would have actually even higher than the 11.3% I just reported (probably closer to between 15-20%), which I suspect is still higher than the corresponding figure for our current recession.
Granted, I personally suspect that the unemployment rate will probably continue to increase, so perhaps we might still see unemployment rates comparable to the 1990's recession in force.
Samurai Joey
And therefore the "actual" unemployment rate (taking also into account discouraged workers who have dropped out of the labour force), the unemployment rate would have actually even higher than the 11.3% I just reported (probably closer to between 15-20%), which I suspect is still higher than the corresponding figure for our current recession.
Granted, I personally suspect that the unemployment rate will probably continue to increase, so perhaps we might still see unemployment rates comparable to the 1990's recession in force.
Samurai Joey
You want the good news or the bad news?
The good news is that most economists think that the "recession" will be over before the end of the year.
The bad news?
They think we are heading for a Japanese style "lost decade" where employment keeps falling after the recession is over and does not recover for many years.
The recession will be over technically when growth is positive again, but that does not necessarily mean there will be any recovery in jobs. It is going to FEEL like a recession for several more years--maybe a decade.
If you have the time I highly recommend you watch Paul Krugman's speeches to the London School of Economics a week or two ago, the Robbins lectures, where he discusses this topic. Especially lectures 1 and 2:
Krugman is a well spoken guy who happens to have been awarded the Nobel prize in economics.
http://cep.lse.ac.uk/_new/interviews/default.asp
The good news is that most economists think that the "recession" will be over before the end of the year.
The bad news?
They think we are heading for a Japanese style "lost decade" where employment keeps falling after the recession is over and does not recover for many years.
The recession will be over technically when growth is positive again, but that does not necessarily mean there will be any recovery in jobs. It is going to FEEL like a recession for several more years--maybe a decade.
If you have the time I highly recommend you watch Paul Krugman's speeches to the London School of Economics a week or two ago, the Robbins lectures, where he discusses this topic. Especially lectures 1 and 2:
Krugman is a well spoken guy who happens to have been awarded the Nobel prize in economics.
http://cep.lse.ac.uk/_new/interviews/default.asp
fuji said:
On the surface I would agree with you, but I think there is a fundamental difference between Japan or Europe and North America. North Americans are by definition mass consumers. While the last 12 months have severely crimped the North American lifestyle it won't take long before people will go back to their old ways. Spend Spend Spend. Especially now, since Obama is bailing everybody and their grandmother out. So, why crimp my lifestyle if somebody is going to bail me out in the end anyways?
Meister said:
Watch the lecture. There are a few really interesting slides in there, for example, how the huge government spend lately has been MORE than offset by a drop in consumer spending; how the huge government borrowing has been MORE than offset by a switch to net savings by consumers.
It's not that consumers don't WANT to spend, it's that they can't, because they have underwater mortgages, or they're unemployed, or they've got credit card debt they can't roll over. They aren't going to spend again until they repair their balance sheets--and his estimate is that it'll take them ten to fifteen years to accomplish that.
He looks at all the previous similar financial situations and shows that there were only two ways out: Balance sheet repair, or an export led boom. Since this is a global phenomena, not just a North American one, an export led boom would pretty much mean finding another planet to export to.
That leaves us with balance sheet repair, which is slow, and painful. We will not be in a technical recession--growth will return--but it may be slow, minimal, stagnant growth without any recovery in employment.
One of his most interesting points is that he shows that some of the conventional macro curves have inverted in such a way that borrowing is no longer inflationary--the government is UNABLE to cause inflation right now no matter how much money it prints because the full employment interest rate is seriously negative meaning that it is cheaper to horde cash than spend it.
