The New York Times ran an editorial today entitled, "When Will the Recession Be Over?" that surveyed 11 experts about their forecasts of when the recession would end. This is the first mainstream compilation of forecasts that I have felt was realistic.
Taken together, I came away with a feeling that the average prediction of the prognosticators was that the economy would return to growth sometime in the Q2 2010. The nice thing with this survey is that only one forecaster made a comment that even resembled having the recession end in Q3 2009.
The most optimistic was William Poole, who suggested, "though without great confidence, that the recession will end in the second half of this year." I think that this is overly optimistic. But he made a good case against the justification for the current wave of bailouts and stimulus being served by Congress.
The most pessimistic was, you guessed it, Nouriel Roubini. He forecasts that the most likely scenario is that the economy begins to recover sometime in 2010, but that growth would be low and slow through 2011. However, he also placed a very high probability (33%) on a very bad scenario. He said:
The most optimistic was William Poole, who suggested, "though without great confidence, that the recession will end in the second half of this year." I think that this is overly optimistic. But he made a good case against the justification for the current wave of bailouts and stimulus being served by Congress.
The most pessimistic was, you guessed it, Nouriel Roubini. He forecasts that the most likely scenario is that the economy begins to recover sometime in 2010, but that growth would be low and slow through 2011. However, he also placed a very high probability (33%) on a very bad scenario. He said:
"We now face a 1 in 3 chance that, if appropriate policies are not put in place, this ugly U-shaped recession may turn into a more virulent L-shaped near-depression or stag-deflation (a deadly combination of economic stagnation and price deflation) like the one Japan experienced in the 1990s after its real estate and equity bubbles burst."I side with the forecast that the economy will return to growth in Q1 2010. My reason is similar to that of Niall Ferguson in that one of the main symptoms (and causes) of this recession is excessive leverage that takes a long time to unwind.
