This cheery update came via reader Michael. Note the Goldman report, which says half the world is in or close to being in contraction mode, includes the US in that camp. Further note that the “two quarters of negative growth” is not a hard and fast rule; the NBER, which is in charge of making the recession determination, can consider other factors in its call (it does need to consist of a slowdown of economic activity of some duration).
From the Telegraph:
Half the world economy, including the UK, is in recession or on the brink, according to research from Goldman Sachs.The investment bank has warned that the world’s major economies, including the US, Japan, the eurozone and the UK, are “either in recession or face significant recession in the months ahead”.
It also raised fears that the slump could have a profound knock-on effect for China, whose thirst for raw materials and consumer products has been propping up many economies.
The bank’s international economist Binit Patel warned: “Given its importance to world growth in recent years, a world recession would in all likelihood involve a hard landing in China.”
America, the world’s largest economy, has so far avoided recession – news that has helped the dollar’s recent recovery. However, Goldman warned that the country is now facing a major downturn as the effect of the credit crisis takes its toll, having been delayed for some months by a series of tax cuts and interest rate reduction….
Martin Feldstein, the Harvard University economist and former head of the National Bureau for Economic Research – which determines whether a recession is in place – said he was “much more pessimistic than a year ago”.
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The Economist research unit issued a report about a year ago with 3 different cases. It’s looking like we are heading for the 10% case… the “oh crap!” worldwide hard landing case.