As a total dummy on macroeconomics, I find myself having the positive take "hey, we were probably moving towards some recession anyway, might as well get it over with in one go". I'm saying this because the graphs go up again in the not too distant future. Besides the obvious personal suffering that is going to be the consequence of this event on at least the short term, and under the uncertain assumption that we're making some return to normal life in 2020, is there any merit towards my naive optimism?
IMF Says Great Lockdown Recession Likely Worst Since Depression
51–60 of 134 posts
Re: IMF Says Great Lockdown Recession Likely Worst Since Depression
#52I don't get what the point of still using the term "recession" is. Even if it's temporary, this is a full-blown depression right?
The term "recession" has meaningful definitions:
A recession is two or more quarters of negative economic growth in a row.
A depression isn't clearly as defined, but some common definitions are "a 10% decrease in real economic output" or "a recession lasting more that two years"[1].
Neither of these definitions are met.
[1] https://en.wikipedia.org/wiki/Depression_(economics)#Definit...
Re: IMF Says Great Lockdown Recession Likely Worst Since Depression
#53The economy is basically a big network of relationships; employee relationships, business relationships, etc. Unfortunately such relationships tend to break quickly and in a self reinforcing cascade but can only be rebuilt slowly as businesses find that there is enough profit margin and demand to bring new people in, one at a time. That’s why recessions happen quickly and recovery time is proportional to how many peo…
It seems likely though that lots of people after the lockdowns will simply be re-hired once lockdowns are over.
Particularly a large portion of the service industry. Perhaps not all with some establishments potentially closing, but most will be called back. Large retail that has closed down as well.
Re: IMF Says Great Lockdown Recession Likely Worst Since Depression
#54I don't get what the point of still using the term "recession" is. Even if it's temporary, this is a full-blown depression right?
How is it a depression if it's only been a few months? Also the IMF article predicts a 3% contraction for 2020 and a 5.8% growth in 2021, so by what definition is this a depression?
An unemployment rate of around 13% (as of two weeks ago[1], so probably even higher now) doesn't seem like it's going to just magically resolve itself, and it's going to have drastic effects.
1. https://www.nytimes.com/2020/04/03/upshot/coronavirus-jobles...
Re: IMF Says Great Lockdown Recession Likely Worst Since Depression
#55I don't get what the point of still using the term "recession" is. Even if it's temporary, this is a full-blown depression right?
The term "recession" has meaningful definitions: A recession is two or more quarters of negative economic growth in a row. A depression isn't clearly as defined, but some common definitions are "a 10% decrease in real economic output" or "a recession lasting more that two years"[1]. Neither of these definitions are met. [1] https://en.wikipedia.org/wiki/Depression_(economics)#Definit...
I'm honestly pretty surprised if we not at "a 10% decrease in real economic output" yet in the US
Re: IMF Says Great Lockdown Recession Likely Worst Since Depression
#56Stock market doesn't seem to agree with this conclusion.
The stock market is commonly considered to represent what the economy is expected to look like in 6-12 months.
If we assume a sharp downturn in Q1 and Q2 of 2020 and a subsequent uptick and prolonged recovery in the second half of 2020 and continuing in 2021 that pretty much corresponds to how stock markets have been reacting over the past few weeks.
Re: IMF Says Great Lockdown Recession Likely Worst Since Depression
#57I find myself less interested in whether or not something is a recession or not. I mean, sure, the numbers of the economy are going down, but the big numbers don't necessarily mean much for anyone's personal life. Of course it can; losing your job is no fun. But the big reason why the Great Depression was so bad, is that we didn't have any social security back then. Unemployed meant having no income at all. No health…
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Re: IMF Says Great Lockdown Recession Likely Worst Since Depression
#58I think historians will look back at COVID-19 as a textbook way not to handle an emergency.
They will point out that 99% of deaths were related to economic effects of our response, not the disease itself.
Hundreds of millions will starve or die in failed states in an economic slowdown, while only hundreds of thousands die of disease.
Re: IMF Says Great Lockdown Recession Likely Worst Since Depression
#59I don't get what the point of still using the term "recession" is. Even if it's temporary, this is a full-blown depression right?
I think of the word "depression" as a lagging descriptor. It means there have _already_ been two to three years of low or negative GDP growth. Technically, I think it even takes 2 quarters to call a recession. But I get your point... even if we don't have the stats for six months or two years, we all know where this is going. It's just the standard terminology doesn't help right now.
This makes sense to me, but people are talking about it in future-forecasting terms already ("this will have been..." etc), might as well start facing the music in those future-perfect statements and say it will probably have been a depression.
Re: IMF Says Great Lockdown Recession Likely Worst Since Depression
#60Earlier quoted context omitted.
I'm curious about the effects of all the consolidation. The top 5 retail giants will, for example, absorb more market share.
wouldn't be so sure. small businesses probably have a somewhat higher ability to go into a sleeper mode where operative costs are reduced to a minimum.
Right, but their customers are exploring new options, and maybe liking them, whilst the business sleeps.