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September 27, 2012

Pethokoukis: Year Of Sub-2% GDP Growth Signals A Recession 70% of the Time

"Red zone."

I can only express my disgust so many times -- this is huge, and the media is embargoing it entirely.

U.S. economic growth is dangerously slow. I’ve frequently written about research from the Fed which finds that since 1947, when two-quarter annualized real GDP growth falls below 2%, recession follows within a year 48% of the time. And when year-over-year real GDP growth falls below 2%, recession follows within a year 70% of the time.

And it's not just Pethokoukis' research:

Citigroup has also taken a shot at determining the stall speed: “Specifically, when U.S. growth has cut below 1˝ percent on a rolling four-quarter basis, it has tended to fall by nearly 3 percentage points over the following four quarters, and the economy has typically entered recession.

Now, two quarters (rather than four) of sub-2% growth leads to a recession 48% of the time; the last two quarters have averaged 1.6%.

Growth the past two quarters has averaged about 1.6%. Not only does this mean the economy is growing more slowly than last year’s 1.8%, it is also slow enough to signal about a 50% chance of a recession within a year. And the third quarter also looks weak.

More from economists: "It's all unraveling."

So, the media isn't going to cover the economy, and it isn't going to cover foreign policy.

It will not cover the lack of prosperity, and to even things out, it will also not cover the lack of peace.

Wonder what they do intend to cover.

Oh, right.

What about your gaaaaaffes.

Oh: A better metaphor than "Red Zone" is one that Pethokoukis (and other economists) are talking about -- "Stall Speed." If an economy isn't going forward fast enough, it stalls and falls, like a plane.



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posted by Ace at 01:13 PM

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