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Why this recession will be deeper and more prolonged than the mild ones of 1991 and 2001. In a paper Rogoff and Reinhart argue that this will be a significant and protracted slowdown. Goldman's Jan Hatzius thinks that the other industries outside banking and housing are in much better shape, and because they did not hire so much since 2001, may not retrench that much. And Gordon at Northwestern University sees exports, which are twice as large as construction in the GDP, should continue to grow strongly easing the housing decline. But he sees pressure on retail sales with higher energy costs and mortgage related troubles.

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Economists say a second lockdown in the economy could lead to businesses shuttering forever and destroy the economy.

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Greece's economy is expected to shrink by 6% in 2012 by many private sector economists in Greece. This means Greece will have a deficit closer to 10% of GDP. Antonio Samaras, leader of the New Democracy Party, is expected to win the elections in Greece to be held by spring 2012. Opinion polls show his party getting 24% of the vote, and Papandreou's Socialists getting 15%, showing how little support any party can gather in Greece. Samaras told the Journal in an interview- the contagion is spreading rapidly, and what he fears is political and social contagion from high unemployment and austerity measures. Samaras says his government would continue with the spending cuts, but also reduce the tax burden on Greek households and businesses, which he views as having worsened the recession in Greece.

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This WSJ editorial says prime minister Abe deserves to continue his efforts to revive the economy after Abe calls a snap election for Dec. 2014. It says the Finance Ministry's ideas for increasing spending and taxes have not worked to win over deflation. It points to the need for prime minister Abe to take supply side actions and get the Third Arrow of structural reform to work.

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Britain's Office of National Statistics said that GDP declined by 0.2% in the first quarter of 2012 from the prior quarter. GDP declined by 0.3% in the fourth quarter of 2011. This means Britain is officially in a recession, with two consecutive quarters of negative growth. The ONS said GDP was 4.3% below its precrisis peak in the first quarter of 2008. The UK registered growth of a mere 0.4% since the coalition government of David Cameron took over in May 2010. This presents problems for prime minister Cameron in tackling the UK deficit. It also shows how difficult it will be for EU countries to address their deficits without economic growth. This has come into increasing focus with recent events in the Netherlands with the collapse of the government and upcoming elections on the issue of austerity cuts, and in France with the presidential elections and the swing to parties questioning austerity measures without economic growth.

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Interview with Robert Shiller of Yale University, by Simon Constable of the Wall Street Journal. Shiller tells Constable that the second dip recession is imminent. Shiller senses that when the National Bureau of Economic Research looks at third quarter data for 2010, it will find that the second dip of the recession started here. In other comments Shiller said that the U.S. is standing at the edge of deflation. The view on housing markets of Shiller, who is one of the creators of the Case-Shiller Home Price Index, is that housing prices could decline for the next 5 years. Shiller sees the US's chief concern as unemployment. He suggests that local governments and the federal government create jobs. One idea is to have a teacher's aide in each classroom.

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Where do you place a winner of the Democratic primary in Maine, Graham Plattner, an oyster farmer who dropped out of college at George Washington University, served briefly in the Middle East wars of Bush and Obama, and had PTSD. Is he working class, middle working class or is he from a downwardly mobile professional class considering he has parents who are well educated and father a prominent lawyer in Maine? Plattner easily defeated a 3 term governor of Maine with his average working class demeanor and language. He is for universal health care, (Medicare for All) universal child care, affordable housing, affordable college. Politics in the US has been moving away from the simple divisions before 1950 created by the Industrial Revolution- the workers in factories and the owners of capital allied with the professional middle class. The few owners of capital mostly college educated allied with people from the non college educated workers in factories who are conservative in their values and beliefs and on the other side the college educated professional middle class now downwardly mobile because of the many recessions and high unemployment from frequent financial crises, with college costing $80,000 a year putting them in deep debt. There is today in the WSJ a story of a professional worker who at $194,000 a year salary is not able to payoff $15000 debt which owners of capital have set at 26% interest and is in downward spiral. Some of this comes from large college and other debt. There is says WSJ Analysis $1.25 trillion in credit card debt alone with highest delinquency rates in decades in 2026. Cost of living has only made things worse and some of this happened as Biden poured money into the economy to help people hurt by the pandemic, yet with some short run consequences with demand strong businesses including hotels, restaurants and grocery stores, auto dealers, jacking up their prices by over 20% in 1 year and Biden failing to respond, getting overwhelmed by open borders migrants under Mayorkas and Harris (also hit by a sudden Venezuelan migrant influx). This is the America one has today- a confusing mix. This in reality means Democrats may take issue with Democrats, Republicans take issue with Republicans, and Democrats join with Republicans on issue by issue basis. It might actually be rational than irrational. On cultural issues if the country has gone over its head and moved too fast on some issues that are not for the general public good, people of different backgrounds can come together to get the best path. On economic issues things are never so straightforward, there are unpredictable consequences and the rules of economics are really not so straightforward either.  Providing relief can mean the government shouldering the burden as during the pandemic which it should, yet with caution as businesses can use the excess demand to raise prices and one is back to square one with everybody worse off as happened with Biden. Migrant flows and fears of insecurity in public spaces can lead to a severe public "discomfort that can waylay the best intentions of a Harris or Biden, leading to public "backlash." In fact the title of a recent book is "Whiplash." Current books include Floridan Marco Rubio's "Decade's of Decadence- How our Spoiled Elites Blew America's Inheritance of Liberty, Security and Prosperity." Rubio means it. Its authentic because as Rubio says repeatedly, his parents could make a living in the 1960's working in a factory with decent wages, low cost of living and low cost of college, the arithmetic between salaries and what you needed for decent home in suburbs and sending children to good public schools, then to college, all adding up. The result is that Rubio could go to college and serve in the Florida legislature. Rubio says in 2026, after the elites under Bush and Obama and faulty economic theory shipped all of our factories to China, that the story of his parents and his education would simply be impossible. This is what he told people in India on his first visit last week. His parents were Cuban immigrants, yet he identifies with Spain and with western civilization, a devout Roman Catholic. Rubio is a Republican, and is in large contrast with Alejandro Mayorkas, also from Cuba, and Biden's Head of Homeland Security. This is the mix of people and representatives in Congress,  business people, small business owners, professionals, that we have today in 2026 in the US. Plattner and Rubio, one a Democrat and one a Republican- both have something in common. Plattner also has general disdain for "the corporate interests, the billionaires, the Washington DC elites, and the establishment politicians."  The winds are blowing in the direction of getting things right- remembering that Eisenhower continued the work of the Kennedy and LBJ administrations (Eisenhower built the Interstate Highway System for instance, and LBJ gave America Social Security and Medicare). Before that Franklin Roosevelt a Democrat built on the work of his uncle Republican Theodore Roosevelt (TR gave America the idea of good governance and built the US Navy, FDR fought the Depression and stabilized a faltering economy after mistakes made by Republican Herbert Hoover could have happened even if Hoover was a Democrat. FDR was himself from a wealthy New York family and when he first met fellow New Yorker Frances Perkins before his struggle with polio, a haughty New York gentleman. That was before Frances Perkins as FDR's Labor Secretary joined forces with Roosevelt to give New York a modernized administration governance structure by 1940 that was applied to all 51 states after 1950. It allied labor with capital with fairness for all, and was the first such modern structure of this size the world had ever seen, which was the fundamental strength of the United States of America. It was imitated in Asia, first in the Shanghai region then China, and first in the Ahmedabad region and now India. The US is faced with the challenge of recreating and rebuilding this today, as first China, then India remind America of its roots which they have followed in their own style and culture.  First good governance, then good institutional structures, alligning labor and capital with fairness for all, strong affordable + accessible educational and healthcare systems, and investments of capital and labor for infrastructure + industrial development. ...

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The European Commission predicts a long and deep recession. In 2009 even with government spending that would add about 0.75% to GDP growth the economies of the EU would shrink by 1.8%, and the 16 countries that use the euro shrink by 1.9%. A jobs loss of 3.5 million jobs is expected. Falling exports mean Germany would see GDP shrink by 2.3%, Britain by 2.8% and France by 1.8%. The downswing will be protracted in Spain and worse in countries like Britain and Ireland where there is a high degree of consumer indebtedness.

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The efforts of president Biden with trillions of dollars of investment and the Fed's supporting measured fight against inflation, mean that the US economy is likely poised for growth in the year ahead.

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Companies in retail, construction  entertainment sectors made layoffs in the first 2 years of the pandemic. White collar workers worked remotely and were not affected that much. In 2023 the layoffs are now affecting professionals and white collar workers. White collar workers are also paid more which creates savings for companies when they layoff higher paid professionals who do not perform critical tasks. In manufacturing and blue collar worker industries there are not many layoffs because companies are hoarding these workers as there are worker shortages. Many workers retired in manufacturing and blue collar leading to shortages in these sectors. Because this is not typical in the layoffs and hiring cycles seen previous to the pandemic this is an unusual situation.

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Christopher Wood points to deflationary trends in Europe and the USA. Bank for International Settlements (BIS) data shows European bank exposure to government debt in Portugal, Italy, Ireland, Greece and Spain at $2.8 trillion at the end of 2009, and a rise in the London interbank offered rate (LIBOR), as further signs of negative trends. The property bubble in China and strong action to tighten and use antispeculation measures have already led to transaction volumes in residential real estate falling rapidly. If Beijing reconsiders further appreciation of the yuan, a trade debate with the U.S. may intensify. All this points to increasing risk of a double dip recession.

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Eastern Oregon that lies on the other side of the Cascade mountains from Portland and western Oregon is mostly rural and feels a world away from Portland. Here farmers have organized a secessionist movement to join the neighboring state of Idaho which is closer to them on cultural issues. The NYT's Across the Country series of articles looks at ways in which America has become different in different states and regions across the country and how local people see what impacts their lives.

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Italy's governing coalition of the Five Star Movement and the Northern League retreats from its plans to raise welfare and pension spending after spending plans leads to loss of investor confidence. Disputes on fiscal discipline with the European Union hurts Italy as ten year bond yields rise from 1.7% to 3.7% after the coalition took office. Italy's GDP declined by 0.5% in the third quarter of 2018 with lower business investment and consumer spending, creating risks of falling into recession. The result is that the coalition government led by Matteo Salvini and De Maio is looking for ways to meet the EU fiscal discipline rules after statements that it would follow its spending plans. Italy's national debt of 2.3 trillion euros is equal to 131% of GDP and perceived as riskier than most other euro countries. Promises made by the coalition government include: allowing retirement at age 62 instead of 67, and intoroducing "citizenship income" or basic welfare of around 780 euros a month for poor and unemployed. These plans are in the budget. Political leaders want to avoid losing face with voters by removing this from the budget. The alternative of the EU opening fiscal disciplinary proceedings against Italy would lead to further loss of investor confidence worsening the economic situation, is also a step Italy wishes to avoid. The EU Commission's view is that the budget plan would increase the structural deficit by $22 billion or 1.2% of GDP. ...

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With 80% of its exports going to the U.S. the growth rate and jobs in Mexico are seeing the impact Finance Minister Carstens expects no growth in 2009. As Mexico's finances are in better shape than in past recessions there is room for some stimulus projects by Petroleos Mexicanos, the government oil company, by auctioning 2 highway projects, for expanding unemployment benefits, and giving $150 million in aid to industries hit by the credit crisis. About 250,000 manufacturing jobs were lost in the last few months of 2008.

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State finances in the US are in strong shape with the federal stimulus and rapid recovery, says this report in the WSJ. US states will hold 136.8 billion in rainy day funds. This is 12.4% of total spending. Healthy reserves make spending cuts and laying off workers for local governments and states unnecessary in an economic downturn. This is a good sign for the US economy.

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Complacency from the Bush Administration reflected in the remarks of Edward Lazear the Chairman of the Council of Economic Advisors in the outgoing Bush administration. He sees no recession in the USA. "I would be very surprised if the NBER looking back at this period would date this as a recession" is what he is quoted as saying to reporters. He went on to say that the $152 billion stimulus of government checks mailed to the people, and Fed interest rate cuts should make the second half of the year a "solid growth period." What this means is that the moves by Congress to help homeowners stave off a new wave of foreclosures through a bill that just passed through Congress on May 7, 2008, is likely to be vetoed by Bush and efforts along the lines suggested by Martin Feldstein, Chairman of Council of Economic Advisors under Reagan, and Sheila Bair at FDIC, to help homeowners avoid foreclosure in her proposal may remain just that as proposals. This situation is likely to be turned over to a new President and make for an election that may revolve around economic issues, as the next wave of foreclosures lead to the start of a declining spiral in home prices leading to further loses in the credit markets and corporate bankruptcies of weaker firms and resulting losses in employment. Rising crude oil prices may result in much of the stimulus being eaten up by paying of some of the debt burden of consumers and rising costs of gasoline at the gas pump. And Feldstein has been very vocal, as have others, about the ineffectiveness of interest rate cuts in the current situation, even doing an oped piece titled "Enough of Interest Rate Cuts." In this sense the current spell of calm in the financial markets may be deceiving, giving Paulson an others in the administration a false sense of hope, and deprive the world economy of some reasonable action to prevent the wave of foreclosures and falling home prices that could set things distinctly downward in the world's largest economy and impacting the rest of the world....

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A report by two former Census Bureau officials, Gordon Green and John Coder, shows the inflation adjusted median household income in the U.S. declined by 6.7%, to 49,909, between June 2009 and June 2011. From December 2007 to June 2009 household income declined by 3.2%. The forces behind this are the large number of people not working or not looking for work who are outside the labor force, and the hourly pay for workers not keeping up with inflation. Prof Henry Farber at Princeton, says his study shows that people who lost jobs in the recession found work again with an average of 17.5% less income than in their prior jobs. This makes this downturn very different than earlier downturns, and giving credence to the argument "that this time its different." Another statistic from the U.S. Bureau of Labor Statistics shows why- in the period December 2007 to June 2009 average length of time for a person who lost a job to be unemployed increased from 16.6 weeks to 24.1 weeks, with the same figure up to 40.5 weeks in September 2011. Higher declines for Hispanics and other minorities further increased income inequalities. Coder and Green call the impact a substantial decline in the American standard of living....

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Japan's hopes of reaching a trade agreement with the US before tariffs of 24% kick in in July are now nil. Upper House elections coming up in Japan mean that the ruling LDP party could lose seats in parliament if it makes any concessions. US sees Japan as stalling in trade negotiations.

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It is essential that we bring down inflation," the US central bank head Jerome Powell tells Congress.

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The WSJ's Paul Sonne gives this exceptional account of how Russians are coping in the economic crisis of 2015-2016, with the twin shocks of the collapse in the ruble and the collapse in oil prices. He does this by looking at the Kaluga region, a provincial city 110 miles south of Moscow that has benefitted from large foreign investment to meet the needs of 20 million consumers in the Moscow region. The governor of Kaluga since 2000, Anatoly Artamonov, worked hard to attract foreign investment that includes VW, Volvo AG, Continental AG, Lafarge, Samsung Electronics, General Electric, and other companies. He ran a collective in the Brezhnev era, and now is energetic in meeting needs of foreign investors. Karmanov says it is stupidity to not say he is talking to business people in other parts of the world because of the political climate in the country. About 42% of the industrial output in Kaluga comes from the foreign automobile plants, including VW. The automobile and light commercial vehicle production in Feb. 2015 dropped by about 39% compared to Feb. 2014, according to the Association of European Business estimate. Only 40% of autombile production cost from assembly lines is sourced locally, the rest is imported at the new value of the ruble which has fallen about 50%, leading to higher prices and slumping demand. Ordinary Russians are feeling the effects of the crisis with higher prices. Consumer price inflation in Feb. 2015 was at 16.7%, with 23.3% increase in food prices. High interest rates to prop up the ruble meant cutting off access to credit to finance consumer purchases. An 8% drop in real wages in Jan. 2015, according to Capital Economics, added to pressures on consumers. With the political and economic crisis following Russia's Ukraine intervention foreign investment in 2014 declined to $18.6 billion in 2014 compared to $61.5 billion in 2013, and the EBRD bank cut financing with the sanctions....

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Few economists predicted the third quarter 2014 GDP decline of 1.6%. The bright side to this is that much of the decline is due to falling inventories. Experts say excluding this effect growth would be about 0.6% for the 3rd quarter. Growth is expected to pick up as falling inventories are replenished in 2015. It also discredits officials at the Bank of Japan and the Finance Ministry who insisted the consumption tax should go ahead and would not be a drag on the economy, giving the government more room for stronger action in the future. Prime minister Abe is considering holding a snap election to run on a pro-growth platform to push ahead with his plans.

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The IMF report on Italy in July 2012 says Italy faces another year of recession. Debt as a percentage of GDP is expected to reach 126% in 2013. One bright spot is that Italy is expected to post a primary surplus by 2013- that is government revenues will cover promised services, excluding interest payments on oustanding bonds of $2 trillion. Because of the recession small shocks could change the outlook says the IMF, and it emphasized the importance of the changes being made to the labor market and for improving competitiveness. These changes need to be implemented early because of elections expected in spring 2013. A key concern is borrowing rates which are near 7% for Italy and Spain. The European Stability Mechanism, the rescue fund, was authorized to make purchases of Italian and Spanish bonds in the June 2012 summit. The ESM becomes operational in the summer of 2012, after the German Constitutional Court makes its ruling about it being legal and after ratification by national governments....