2009 March 09 Monday
No Economic Recovery Until 2011?

Mark Zandi, chief economist and co-founder of economics consulting firm Economy.Com, says economic growth will not start again until 2011. Yes, 2011, not 2010.

For the US economy, things are getting “measurably worse,” Zandi said. He predicted 2009 would be a “very difficult year — washout,” with the economy contracting 2.5 percent. That is twice as big a decline in economic activity as the Obama Administration predicts in its budget.

Growth again in 2011

As for 2010, “I don’t think we go anywhere — basically a flat year,” Zandi says. He added, “I think we get growth in 2011.”

Ouch! So if you lose your job this year plan for an extended period of, er, leisure.

Nouriel Roubini has also become more gloomy about recovery. He's in the 24-36 month range for recession duration.

"We are in the 15th month of a recession," said Nouriel Roubini, a professor at New York University's Stern School of Business, told CNBC in a live interview. "Growth is going to be close to zero and unemployment rate well above 10 percent into next year."

Echoing a speech he made earlier in the day, Roubini said he sees "no hope for the recession ending in 2009 and will more than likely last into 2010."

Roubini sees a one third chance of a 3 year recession.

"We could end up ... with a 36-month recession, that could be "L-shaped stagnation, or near depression," Roubini said. He puts the chance of a severe U-shaped recession at 66.7 percent, and a more severe L-shaped recession at 33.3 percent.

Back in April 2008 Roubini was forecasting a 12 to 18 month recession. So he's definitely gotten more bearish.

I think the stock market's parallel with the early 1930s might continue for a while. Obama's use of the downturn to justify what he wanted to do anyway is not helping. He should stop treating the US economy as a golden goose who will lay eggs no matter what. He's quite capable of making things worse and he needs to figure that out. I'm guessing he'll stay oblivious though, to our detriment.

Share |      By Randall Parker at 2009 March 09 09:43 PM  Economics Business Cycle

Eric Stratton, Rush Chairman said at March 10, 2009 7:29 AM:

Obama will take us in a hard left direction, and when the economy does not improve, the predictable apologists will come out and say that the reason it's failed is because Obama's policies were not given a chance, or that he didn't go far enough to the left. These are the same people who insist that communism was a great idea, but didn't work because of some flaw or other in the Russian culture.

Ned said at March 10, 2009 8:45 AM:

The DJIA is down 32% since election day. This is the worst performance ever for a new president. Of course, the market was already losing value in the last year of the Bush II administration. Still, Wall street has been voting with its feet, and the results aren't positive for the new administration.

Trent Telenko said at March 10, 2009 2:58 PM:

Moody's chief economist Mark Zandi is not paying attention to the likelihood of a California state government bond default. A default that would result in the US economic recovery not starting until late 2011 because of the financal market fallout that it would cause.

Fear of a bond default is was what drove the California budget "compromise" late last month, and that is almost universally seen as a mere postponment of the problem by 12-15 months.

The hope of California legislators was that the US economy generally would be picking up by then, with California tax receipts rising enough to avoid a second quarter 2010 bond default.

But, if as Moody's chief economist is right, the recession won't hit bottom until 12-15 months from now.

California's budget crisis and impending default will recur right then.

We are in for interesting times.

Robert Hume said at March 11, 2009 11:35 AM:

Basically 50% of our working population now has *average* IQ characteristic of low-productivity countries. (Of course 20% of that population has IQs above the white average. And there are some on the upper tail of the Bell curve that are very bright, like Obama. Just not enough for average productivity and creativity to be world-class.) Obama is trying to fix this by making minorities stay in school longer, and by giving better teachers more money. That won't work. For one thing, all teachers are not above average. The net result will just be to give good teachers more money. So we this may be the time that we slip down a rank. Which means that our stock market will never recover its full value.

Anonymous said at March 11, 2009 1:33 PM:

No Economic Recovery Until 2011?

Or ever. We've entered the downhill side of life for the baby boom generation. Once white males get in their 50's they tend to die a lot. Tony Snow. Tim Russert. About half a dozen former co-workers of mine. These dead people don't pay tax. They don't consume.

The establishment will "fight" this with immigration. Obama has stated previously that he wants to increase African immigration. The average African IQ is 70. I mean, my God. The best they can do is late grammar school in terms of abilities.

It's terminal. The best we can hope for is a break-up of the USA into smaller countries.
Countries that have borders. Then maybe we can build something again.

black sea said at March 11, 2009 11:22 PM:

A lot of factors do seem to be coalescing into a pretty nasty, long-term slide. I agree with the commenter above: the Baby Boomers, whatever their flaws, were (are) an educated and productive cohort, but at this point, they're a lot more focused on their blood pressure medications, their retirement portfolios, and their kids' tuition costs then they are on starting a new business or launching a new product, and some of them are already dead. If I remember correctly, half of the students in American schools are now non-white, and most of those non-white kids are not East Asians. If, like me, you are retrograde enough to believe that IQ counts for something (a lot) in the realms of school and work, this can't help but bode poorly for the future. As a friend of mine, recently retired from university teaching once put it: "What makes a university good? Good students, that's the main thing."

There is, sadly, no way to really compensate for the deficiencies of less-capable students, other than dumbing down the material. More class time won't do it. More study time won't do it. More technology in the classroom won't do it. I used to know a guy who had, earlier in his career, worked as a computer engineer, for Honeywell, I think. He got very good performance evaluations, but his lowest mark was always in creativity. He asked his supervisor what he could do to improve his creativity score. His supervisor offered a few half-hearted suggestions, and then admitted, "actually, there's nothing you can do to boost your creativity. You either have it, or you don't."

Panfilian said at March 14, 2009 8:37 AM:

Obama is trying to help. By boosting low IQ affirmative action students into the best universities and top government jobs, Obama is paying back society for the immense help he received on the way up.

If America can just turn a blind eye to the lack of qualifications and absence of expertise within the Obama cohort, everything will turn out fine, for the best.

Bob Badour said at March 14, 2009 10:55 AM:


I haven't paid too much attention to Obama and his cabinet. While I am a fairly conservative person, doesn't your description better describe G. W. Bush's cohort? He certainly seemed to favor loyalty and close ties over competence or intelligence.

All I have gathered about Obama's cohort is he seems to prefer folks who assume the rules, like paying taxes, don't apply to them. Probably something to do with his ideas about seizing power or something.

Rafi said at February 12, 2015 1:59 AM:

2011 is passed long ago and it is 2015. Already 1 month gone. Now we are middle of second month of 2015. Still no recovery and just now I see news in news papers that Obama is going to start a new war in Iraq against IS. So the problem is our economy is not going to raise again as long as we continue war on earth. My opinion.

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