The Great Recession

Worst six months for the U.S. economy since 1958.

Gross Domestic Product down at an annual rate of 6.1% in the first quarter of 2009, after a 6.3% drop in the last quarter of 2008. (See below.)

But there is this optimistic quote from an article in The New York Times: “We’re still declining, but we can see the forces that will get us out of this.”

Well, except that the comment comes from Markus Schomer, “global economic strategist at AIG Investments.”

Why on earth would anyone quote somebody from AIG?

The same article also says, “Earlier this week, General Motors announced it would slash another 21,000 jobs in the United States.” And once again, no mention is made of the more than 100,000 workers expected to lose their jobs just from GM closing 2,600 dealers. I guess those people don’t count. Ten here, twenty there, forty here. Ain’t no thing.

GDP change year-to-year:
2008 1.1
2007 2.0
2006 2.8
2005 2.9
2004 3.6
2003 2.5
2002 1.6
2001 0.8
2000 3.7
1999 4.5
1998 4.2
1997 4.5

As you can see, in a healthy economy the GDP grows about 3% on average each year. The current rate of negative 6% then is even worse than it seems.

The GDP dropped 10.4% in the first quarter of 1958 after dropping 4.2% the last quarter of 1957 (on an annualized basis); but it was down only 1.1% for the entire year 1958, however, due to a strong recovery. It seems reasonable to expect that 2009 could be the worst calendar year since 1946, when the U.S. came out of the war economy and GDP dropped 11%.

3 thoughts on “The Great Recession”

  1. Most of AIG is just fine, and the company is generally filled with highly competent and knowledgeable people. It is the part of AIG that insured securities and bonds that’s screwed. The rest of the company is just fine and is, in most cases, fully insulated from the bad stuff that went on in that one division.

    I have a friend who works at AIG. He tells me that most of the people in the company are as pissed at the clowns in the credit default swap division as anyone else.

  2. Oh, I acknowledge that about AIG. It still seemed an odd source to quote, ironic even, though I’m never quite sure where irony ends and incongruity begins.

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