[lbo-talk] recession severity

[Doug Henwood]

A lot of Wall Street types are forecasting the worst recession since  
the 1930s. My first reaction to this was: worse than 1974-75, or  
1981-82? Those were really nasty - GDP down around 3%, unemployment  
up to 9-10%. We haven't seen anything like that in decades, though we  
might this time. And there's nothing (yet) in the leading indexes to  
suggest that's in the offing. I asked a pal of mine who's one of Wall  
Street's leading business cycle forecasters if there's anything to  
this prediction - he agreed with me that there's nothing in the  
leading indicators yet to suggest anything like that, and he  
concurred that the gloom may be in large part the result of the fact  
that Wall Street has been hit so hard in recent months, which might  
be skewing their perspective.

If the leading indicators decline more - the Conference Board's is  
now off around 1% for the year ending in December, compared with  
8-10% declines before the mid-70s and early-80s recessions - I'll  
change my tune. But we're not there yet.

Doug