An average of 55 forecasters in the Jan. 15 Wall St. Journal survey expect real GDP to fall by another percentage point (a 2.1 percent drop in total) before recovering in the third quarter of this year. If they're right, this would be just the third deepest recession. NOT A CATASTROPHE! The current unemployment rate of 7.6 percent is quite unlikely to reach the postwar record of 10.8 percent. But the Journal forecasters expect the jobless rate to top out at 8.9 percent after the recession is technically over - making this very close to becoming the second worst recession in terms of job loss. NOT A CATASTROPHE!
When you ad to this the extremely low interest rates we now have and compare them to the 18% rates of the Carter years. I looks even less ominous.
The president needs to be a calming voice right now, a source of strength. It's not helpful for him to be warning of a "catastrophe" and making vague, untenable allusions to the Great Depression. Unless he's looking at this from a pure political, power grabbing point of view. 'Me and mine are getting ours so screw the rest of the country'
Recessions have almost always ended within a year or so. Debts have to be worked down and excess inventories sold off so that profits, and therefore stock prices and wealth, can revive.
Such healing processes do not take years, as the president suggests - unless the government does too much foolish tinkering. But recovery will require more perspective and patience than we've been seeing from the White House lately, because time really does heal many economic wounds. Unless the White House and dinosaur Democrats keep picking at the scab.
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