Worse Economic Downturn Since World War II… Just Got Worse

A Business Downturn of Intensifying Severity – John Williams of ShadownStats.com

This cartoon from Jim Sinclair’s jsminset.com pretty much catches where we are in the current business cycle. The economy remains in a ski-jump-shaped downturn, as traced out by the path of a novice skier, and, indeed, the economy is tumbling into an unhappy freefall. I thank Mr. Sinclair and his organization for allowing our use of the image. (click image to enlarge)

GDP revisions back to first-quarter 2007 confirmed that the economic downturn has been more severe than previously reported, while rising inventories and slowing growth — indicated in the “advance” estimate of second-quarter 2010 GDP — have set the stage for renewed quarterly GDP contraction in third-quarter 2010. While such likely will be recognized as a “double-dip” recession in the popular media, this particularly deep and protracted contraction — the worst of the post-World War II era — has been an ongoing economic disaster, with no intervening recovery to delineate between two periods of sharp decline.

The initial plummet in activity was followed by a protracted period of economic bottom-bouncing along a low-level plateau of business activity, with a slight upside bounce in statistics reflecting a combination of short-lived impact from stimulus activity and data distortions due to the extreme nature of the downturn in the context of an economic reporting environment never designed to handle such a circumstance. In December 2009, a downturn in real (inflation-adjusted) broad money supply (SGS Ongoing M3 Estimate) signaled that low-level-of-activity stagnation would turn to intensified or renewed downturn in roughly six-to-nine months (see Commentary No. 308). In the appropriate timeframe, that signal now has started to prove out in the reporting of a number key economic series.

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This article provided by John Williams of ShadowStats.com. We at the AustinReport.com highly recommend John’s efforts in providing us with highly accurate economic data in a way that it was once reported by our Government. His is the only source of accurate, unbiased reporting and analysis we have seen over the past decade.  Visit ShadowStats.com and subscribe if you’d like to the the truth about Government economic policy.

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