Chart du Jour: Subpar recoveries follow financial recessions

By Prieur du Plessis, on January 7th, 2010 posted in: Economy, Investment

“Economic cycles associated with financial traumas such as banking crises or asset price collapses tend to have deeper downturns and weaker upturns. The current uptrend in US economic growth should be sustained, but the rebound will remain subdued compared to recent recoveries,” said BCA Research.

The chart below illustrates the typical recovery patterns following financial and non-financial recessions respectively. As they say, a picture paints a thousand words … Should the after-effects of the financial crisis indeed remain a serious headwind to economic growth, policy conditions should remain favorable for risky assets.

Source: BCA Research – Daily Insights, January 6, 2010.

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January 7, 2010 at 4:44 pm

[...] in any other recovery in modern history save that of the Great Depression. To that problem (chart):http://www.investmentpostcards.com/2010/01/07/chart-du-jour-subpar-recoveries-follow-financial-reces…These difficulties would be tough enough to overcome under normal conditions. But when the [...]

dblwyo

January 7, 2010 at 5:17 pm

Excellent chart – the best simple compression of Reinhardt and Rogoff I’ve seen. Thanks. Damaged banks are only one problem though. Housing (in the US and elsewhere will be a problem, cf. CalculatedRisk) but the real problem will be poor job creation. Behind that we have the restructuring of balance sheets after three decades of excess.
A survey of some of these (not the Debt/Savings/Investment barriers to growth)plus markets and business that might interest your readers is encapsulated here:
Review & Outlook: Economy, Markets and Business in the New Normal

Fx trading

January 8, 2010 at 12:45 am

The red line for the current recession is probably even less steep than the one on the graph.

Why?

Well, the global impact of the current recession is much larger than most we’ve seen. It has broken our world finance system, which is an essential pillar for economic growth and development.

As a result, the economic recovery is likely to be even more sluggish

The Big Picture » Blog Archive » Words from the Investment Wise 1.10.10

January 10, 2010 at 3:24 pm

[...] crystal ball into 2010 and the next decade“, “Bill Gross: Let’s get ‘Fisical’“, “Chart du Jour: Subpar recoveries follow financial recessions“, “Chart du Jour: No signs of imminent rate hike” and “Is there a decennial pattern in [...]