Thursday, July 31, 2008

It's the Worst "Not Quite A Recession" since the Great Depression.

A fast check at Google News a few minutes ago quickly found news reports of how we now are in the ....

"worst economic crisis since the Great Depression"

"worst financial crisis since the Depression"

"worst housing downturn since the Depression"

"worst venture and investment environment since the Depression,"

"worst credit crunch since the Depression"

"worst year for the newspaper business since the Depression" (if the New York Times says so itself)

and ... wait for it ... "the worst financial crisis since the Great Depression, the biggest housing bust since the Great Depression, the coming biggest systemic banking crisis in the last 50 years, the worst U.S. recession since the stagflations of the 1970s, the biggest liquidity and credit crunch in decades...."

....among many others.


The Bureau of Economic Analysis reported today that U.S. real GDP grew at a 1.9% annual rate in the second quarter of 2008, less than many analysts had been predicting a week ago, but substantially better than the 6-month-ahead predictions for that number that we were hearing back in January.

Today's report contained some good news. The main reason that the final GDP number was weaker than predicted was the big drawdown in inventories. Without that negative contribution from inventories, real final sales grew at a robust 3.8% annual rate... [Econbrowser]
By the way, "the big draw down in inventories" is good, it means manufacturers will have to increase production to replace them, or at least that overstock is being eliminated. Either way it portends increased future production.