Wednesday, September 7, 2011

Current Economic Slowdown Signals Another Coming Recession

From The Federal Reserve Bank of Cleveland, Economic Trends, "Interpreting the Recent Slowdown: Delayed Recovery or Stall Speed?" by Margaret Jacobson and Filippo Occhino:
As recently emphasized by Jeremy Nalewaik, economic activity tends to decelerate in the year before a recession. After growing along the trend in the expansion period, the economy may enter a state of stall speed, with GDP growing at a rate slower than trend just before the arrival of a recession. Average growth in the year before a recession tends to be lower than during the preceding years. This pattern suggests that the current slowdown in economic activity may signal another recession coming.

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