Q3 GDP & Housing Revisions Expose Considerable Double Dip Risk

[cieldumort]

Significant downward revisions to earlier estimates of both third quarter US Gross Domestic Product and recent months' New Home Sales (which are by far greater drivers of economic growth compared to their Existing Home Sales counterpart), expose that the threat of a Double Dip Recession is not only very real, but appears to be rising.

From Econoday

Comments

[cieldumort]

Here's taking a look at how US GDP fared over the course of the last few recessions (the two "shallow" recessions of 90-91 and 2001 and the "deep" recession of 1981-82). These details give a clearer idea of how GDP more typically rebounds after "shallow" and "deep" modern-day recessions.

These are Quarter-on-Quarter changes, at annualized rates (Multiplied by roughly four)



Above: the first full quarter of "recovery" (Q1 1983) following the "deep" 81-82 recession rose at a 5% annualized rate. The current recession has actually been considerably deeper than the 81-82 recession.

Below: The first full quarter of "recovery" (Q1 2002) following the "shallow" 2001 recession rose at about a 3.4% annualized rate.



Below: The first full quarter of "recovery" (Q2 1991) following the "shallow" 1990-91 recession rose at about a 2.8% annualized rate.



So really, it's clear that if the most recent recession ended in June, the first full quarter of recovery would be Q3 - and it would have come in incredibly weak given the depth of the recession.

If the most recent recession ended in July, then Q4 would be the first full quarter of recovery. Most estimates for Q4 are in the 3% range. This, too, would still be weak following such a very deep recession.