As recently emphasized by Jeremy Nalewaik, economic activity tends to decelerate in the year before a recession. After growing along the trend in the expansion period, the economy may enter a state of stall speed, with GDP growing at a rate slower than trend just before the arrival of a recession. Average growth in the year before a recession tends to be lower than during the preceding years. This pattern suggests that the current slowdown in economic activity may signal another recession coming.
Wednesday, September 7, 2011
Current Economic Slowdown Signals Another Coming Recession
From The Federal Reserve Bank of Cleveland, Economic Trends, "Interpreting the Recent Slowdown: Delayed Recovery or Stall Speed?" by Margaret Jacobson and Filippo Occhino:
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