Understanding a depression
By: PAUL JACKSON
March 11, 2009 9:34 AM CST
One of my favorite reads each day is Calculated Risk — if you aren’t reading, you should be. The blog’s host put up a tour de force yesterday that asked the question: are we really facing a depression here in the States?
The bottom line of the well-reasoned analysis is worth paying attention to:
Even though the current recession is already one of the worst since 1947, it is only about 1/3 of the way to a depression (assuming a terrible Q1).
To reach a depression, the economy would have to decline at about a 6.6% annual rate each quarter for the next year.
Which means simply: things are bad, yes, but they could get a whole lot worse. While CR remains confident a depression isn’t in the offing, and I agree we have a ways to fall before we could get there, I think I’m starting to side a bit more with Paul Krugman on this — things could get a whole lot worse. How much worse in anyone’s guess.
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March 11th, 2009 11:24 pm by STLrealtor
Do you think that because of the previous depression, many people will be preparing for similar circumstances? How do you think a depression in todays market would impact your everyday man, differently than the one back in the 40’s
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