Categorized | economy, happenings

About those business plans you were making . . .

As a subscriber to Macroeconomic Advisors, I get all the dry and dusty latest. They’ve just released a report forecasting the length and strength of the current economic downturn. I won’t bore you with details, so let’s plunge the fork right in the meat:

Given the deteriorating fundamentals, the limited room for further use of conventional monetary policy, and the uncertainty about the effectiveness of non-conventional monetary policy options, the recession likely would be long and deep in the absence of a fiscal stimulus package. Specifically, we project that output would decline for five consecutive quarters, spanning the second half of this year and the first three quarters of next year. The peak to trough decline in output in the pre-stimulus baseline would be about 3%, roughly on par with the 1981-1982 recession. Positive but modest growth would reemerge in the fourth quarter of next year. GDP would decline 1.1% over the four quarters of 2009. The unemployment rate would peak at 9½% in mid 2010, and remain above 9% through the first half of 2011.

These guys have one of the best macroeconomic forecasting records on the planet. I’m not sure a fiscal stimulus package will appreciably change this outlook, so these are the numbers and macroeconomic expectations all your business planning should be based on.

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