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Monday, January 5, 2009

How Long Will the Greatest Depression Be?

When does a recession turn into a depression? When economists start getting fired! Since the experts can't even agree on how long this downturn will last, let's hope that starts happening soon.

One thing everyone agrees on: The current economic contraction, which began a year ago, will be the longest on record since the Great Depression. The optimistic scenario, voiced in the New York Times, is that it will end by the middle of 2009, as the housing market recovers and the government pours money into public works. That will put the recession at 18 to 21 months. Even playboy economist Nouriel Roubini, the professional doomsayer who installed a wall of vaginas in his personal misbegotten real-estate venture, thinks that the worst-case scenario is a recession that ends by December 2009 — 24 months. Consumers are resilient, economists say, and love nothing better than earning money and spending it.

But that's a rather U.S.-centric forecast, amid a globalized economy. (Who knew the halls of economics departments were filled with such isolationists?)

There are, even today, sectors of industry which make physical things. So old media, I know! The business is called manufacturing, and its forecasts are abysmal. A strengthening dollar, predicted as the rest of the world suffers economically, will hurt manufacturers' exports. And weak foreign markets will hurt many of the technology giants which thrived on overseas growth.

So could the recession last through 2010? Quite possibly. But it's a scenario no one's contemplating — even the most bearish of economists.


Owen Thomas



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