Friday, 10 July 2009

Unemployment, Not the Stock Market, Distinguishes a Recession From a Depression

The current plunge is structural, not cyclical. Most of the jobs lost will never come back. The real estate bubble severely distorted the economic structure. Now the world economy has a lot of rebalancing to do. And this process will last much, much longer than the “green shoots” crowd deems possible.

My suggestion for you today is to watch the stock market for hints of the beginning of the next stage of this crisis. Watch unemployment and world trade as reliable indicators of the severity of the slump.

[Posted at the SpookyWeather blog, July 10th, 2009.]

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