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How bad are recessions? February 28, 2009

Filed under: Economy,Image — Bertil Snel @ 08:08

I am sure we all worry about our the current economic climate. Yesterday we learned that the US has seen been in an ecomomic decline of more then 6% last quarter. Of course this causes a lot of suffering with companies and individuals. But how bad is it in the long run? The graph below pains a reassuring picture. Past recenssions hardly made a dent in the long-term upward growth in the GDP of the US. 

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4 Responses to “How bad are recessions?”

  1. recessionnews Says:

    I think it’s going to get much worse this time around. I’ved through the last 3 recessions here in the US, and while they didn’t seem all that bad to me(I managed to stay employed and even find a new job during one of them), I think this one is going to be closer to a full blown depression, or at the very least a deep recession that may grind on for a number of years. I hope I am wrong of course, but am not optomistic at all. It’s going to be a rough ride with a lot of people hurting $-wise.

  2. Bertil Snel Says:

    I agree that this recession seems particularly harsh and that it will cut deep. But I do think that after a couple of years we will be back on similar increasing economic growth figures. We will not give up much of our gained wealth or lifestyle. In fact, maybe this is bad. We seem to be paying every price needed to prevent loosing same of the wealth we have. Maybe we need to accept that we were living on a too high standard?

  3. recessionnews Says:

    The problem is that most of us now-unemployed
    folks cannot survive a 2-3 years “waiting period” consisting of stagnation and rampant unemployment while we wait for things to get better. As for “wealth”, well, much of that only existed theoretically, on paper, I also think a lot of people are going to be living at a much lower standard than they were used to previously. It will be forced on many, others will see this as an eye opening learning experience, and embrace thier new-found fiscal frugality. The smart ones were living way below their means all along, and thus
    not only won’t need to adjust their lifestyle, but their savings now put them in the enviable position of being in the driver’s seat(so to speak)
    should they decide to buy a home or upgrade to a better one.

  4. Ramon de Noronha Says:

    Please have a look at the date 6 october 2008. The very first date the FED offered interest (0,75%) for banks who wanted to deposit their excessive money. Since then it has risen to 1,25%. So why bother lending to Joe the Plumper or companies in problems if you can get some money without any risk at the FED. You can even deposit your 0% TARP loans at the FED.


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