Calculated Risk: On Roubini's 2 yr recession

Thursday, January 08, 2009

Roubini: Two Year Recession
by CalculatedRisk on 1/08/2009 04:30:00 PM

From Rex Nutting at MarketWatch: Roubini forecasts recession will last 2 years

The U.S. recession will last two full years, with gross domestic product falling a cumulative 5%, said Nouriel Roubini, ... For 2009, Roubini predicts GDP will fall 3.4%, with declines in every quarter of the year. The unemployment rate should peak at about 9% in early 2010 ...
Roubini is forecasting a pretty serious recession, but far short of a "depression" which is usually defined as a 10% decline in real GDP.

The concensus (and the Fed forecast) is that the economy will bottom in Q2 2009 with a sluggish recovery in the 2nd half of this year.

The recession started officially around Dec 06 - Jan 07. Roubini is prediciting that the recession will last through Jan ' 09 ish. This is exactly my prediction as well (read earlier posts) and I believe Calculated Risk has come up with similar projections himself. Its worth bearing in mind that my projection is based on the following "givens": Obama's Stimulus plan being over 800B and that the US will nationalize major banks QUICKLY. Both of these are policy responses and may not happen in Q1 of 2008 and if there is a substantial delay by the Obama Administration - the recession may drag out further into 2010. I am making my business plans on the assumption that Q1 of 2010 will see the end of the recession.