Thursday, October 28, 2010

The Moment of Truth

(EDC – Peter G. Hall)
Chaotic movements in world economic output gave way to a new phase at mid-year. Suddenly, it seemed that everything got quiet. Far from an antidote to chaos, this is a disquieting quiet, a mid-rebound slowdown that doesn't normally occur. It’s a shock, and many wonder why it has happened.

But shocks have almost become the norm in recent times. Think of the growth cycle that ended in 2008 – it lasted about 16 years, roughly twice the length of a normal growth cycle. Then the economy took its biggest tumble in 60 years. That was followed by an aggressive, six-month rebound that began in the fall of 2009. Agreed, the magnitudes are shocking, but the movements aren't. For the most part, these are normal phases of the business cycle – this one was just super-sized. Read more or watch the video here.