GDP’s “statistical recovery”

GDP Aug09.jpgThe blog is very interested to see the different outlooks being proposed by central bank heads. US Fed Chairman Ben Bernanke claimed Friday that the financial crisis was due to “panic”, rather than fundamental problems such as reckless lending. As a result, with the “panic” over, he now saw the potential for securing “a sustained economic recovery”.
But at the same meeting, European central bankers were more cautious, believing that the world economy still faced major problems:
• Germany’s Bundesbank President Axel Weber said it was “too early to say it won’t be a bumpy road ahead.”
• Whilst European Central Bank President Jean-Claude Trichet was “uneasy when I see that because we have some green shoots here and there, we are already saying, ‘Well after all we are close back to normal“.
The underlying issue is shown in the chart from, which shows “official” recessions in grey. And these are much shorter than the “real” recessions faced by industries such as chemicals. This is because the end of the destocking process produces a statistical recovery, as GDP rises in response to a renewal of underlying demand.
Thus the “official” 1980’s recession ended in 1982, and that of the 1990’s lasted just 6 months. Yet in reality, the chemical industry had to wait 3-4 years before a real recovery took place. And even the minor downturn of the early 2000’s was far shorter officially, than in reality.

2 thoughts on “GDP’s “statistical recovery””

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    There are clear signs in the above chart that the inventory cycle has turned positive again, as customers restock. Globally, data from the American Chemistry Council shows chemical production now down 10.5% versus last year, after being 13.4% down in…

  2. US faces a jobless “recovery”

    Today is Labor Day holiday in the USA. But sadly, the latest news on jobs remains deeply worrying. As the chart from the New York Times shows, jobs are still being lost (blue line), long after recovery had begun in…

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