Tags: US | economy | Modern | Depression

Economist David Rosenberg: US Entering Modern-Day Depression

Friday, 07 Oct 2011 08:23 AM

The U.S. economy is sliding into the depths of a depression, or at least a modern-day version of one, says David Rosenberg, senior economist and strategist at Gluskin Sheff in Toronto.

Officially, the U.S. has brushed off the recession — defined as two consecutive quarters of economic contraction — but remains sluggish and immune to policy responses.

Yet with unemployment rates staying at 9 percent or higher and one crisis after another threatening to shatter a fragile economy, the economy is clearly experiencing something worse than a typical recession, which often sees a strong bounce back upon conclusion.
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"Here we are today, with a severe recession (2007-09) followed by the weakest recovery on record and now on the precipice of another economic downturn," Rosenberg writes in an analysis, CNBC reports

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(Getty Images photo)
"This is a modern-day depression, not entirely dissimilar to Japan’s post-bubble experience of the past two decades."

The government has rolled out $800 billion in stimulus measures while the Central Bank has slashed interest rates and bought trillions of dollars in assets from banks to pump money into the financial system.
Recovery, meanwhile, has been anything but acceptable to policymakers.

"Simply put, an economic depression occurs only once it becomes painfully obvious that the markets and the economy are failing to respond to repeated bouts of policy stimulus." Rosenberg says.

The word depression conjures up images if the soup lines and grim, dusty faces in the 1930s, although CEOs say that's not likely.

"Recovery is underway, but it's a long, slow recovery. Slower than we'd like," says General Electric CEO Jeff Immelt, Reuters reports.

FedEx founder Fred Smith agrees: things are bad, but the country's not falling off a cliff

"We don't see a contraction; we don't see a recession," said FedEx founder Smith.  "It's steady as you go, slow growth."

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The U.S. economy is sliding into the depths of a depression, or at least a modern-day version of one, says David Rosenberg, senior economist and strategist at Gluskin Sheff in Toronto. Officially, the U.S. has brushed off the recession defined as two consecutive quarters...
US,economy,Modern,Depression
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2011-23-07
Friday, 07 Oct 2011 08:23 AM
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