Krugman: Recession Over

“The end of the world appears to have been postponed. We’ve had an extraordinarily terrible crisis though we’ve probably hit bottom as world output has turned positive.”

-Paul Krugman, Princeton University

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A few bullet points from Krugman’s comments in Helsinki:

• The U.S. may have emerged from recession at the end of July or in August

• Growth may be returning after 4 consecutive Qs of negative GDP — the longest contraction since record-keeping began in 1947.

• U.S. has $1.1 trillion in annual capacity “staying idle.”

• The world has become “highly subject” to financial bubbles;

• There was a  “remarkable” willingness to ignore signs of the bubble — or more politely,  to fail to recognize it.

I believe the NBER made a mistake in the dating of the 2001 recession — they tagged it as over November 2001 — too soon, based on the subsequent employment data. The trough wasn’t for some time.

I suspect we won’t see a similar error this time, and that implies the official mark of the recession being over may be later than many economists (including Krugman) believe.

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Source:
Krugman Says ‘End of the World Postponed’ as Economy Hit Bottom
Kati Pohjanpalo
Bloomberg, Sept. 21 2009
http://www.bloomberg.com/apps/news?pid=20601087&sid=afZhBPNaXu1o

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