Today I am getting a lot of questions as to why we coined this the “Great Recession”, and sometimes its just easier to capture a simple answer with a picture rather than prose. Today saw the release of the latest US GDP data, and Andrew Barber has incorporated that data in the chart below. That’s what The Great Recession looks like.
Most economists call a recession 2 consecutive quarters of falling GDP. So we have that - but what we really have here is the Greatest peak-to-trough belly flop versus consensus Wall Street expectations (think the ooh and the ahh of Private Equity and “Chindia” of 2007) in US history. No, this is NOT a Great Depression. Pre the Great One in the 1930’s, depressions happened all the time:
1. 1893-94 = GDP down -9%
2. 1907-08 = GDP down -10%
3. 1919 = GDP down -13%
My Partner, Todd Jordan, asked in an early note today, “what is a depression anyway?” Well Todd, I think it’s when people are depressed – and a lot of the shameless rats in this business should be… but it is definitely not what we are seeing here, from a US economic perspective, in 2009.
Keith R. McCullough
CEO / Chief Investment Officer