Sunday, September 28, 2008

Darda: A Recession Is Unavoidable

Michael T. Darda, the chief economist of MKM Partners informs us in the Wall Street Journal, "The Treasury bailout plan to recapitalize the U.S. banking system may help the U.S. avoid a deep and protracted recession. But even if the plan succeeds, it almost surely will not prevent a recession."


Indeed, below the GDP figures, lifted by net exports, "Gross domestic purchases contracted during the second quarter. Gross domestic purchases also contracted during the fourth quarter of 2007, and only rose by 0.1% at an annual rate during the first quarter."

Furthermore: "Real retail sales growth has been negative on a year-to-year basis for nine consecutive months, the longest streak of declines since 1991. This data, and the tremendous spike in both jobless claims and the unemployment rate, are telltale signs of an economy that is in reverse gear."

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1 comment:

Maggie said...

Will this recession be longer than the one in the early eighties? By the way the economy is going, it seems as though it could. Banks are failing, retail sales are down, and the housing price is near the lowest it’s ever been. The only thing keeping this country on the positive end is GDP had slightly grown. Shouldn’t there be a better balance between growths and failures in the economy to help the country?