Saturday, February 28, 2009

A mild depression?

I'd rather be a little bit pregnant. The nation's fourth quarter GDP shrank at a rate nearly double what economists expected -- 6.2 percent negative growth -- prompting Mark Zandi, chief economist at Moody's, to set odds for "a mild depression" at 25 percent.

In a single stroke, The New York Times attempts and fails to reassure: "Current conditions are not even as poor as during the twin recessions of the 1980s, when unemployment exceeded 10 percent, though many experts assert this downturn is on track to be significantly worse." Because the frightening truth is that no one can predict just how significantly worse things will become.

The growing consensus on things worsening significantly doesn't require a leap of logic or a Ph.D. in economics, merely an observation of what is. Yesterday, we learned from the Commerce Department that durable goods orders fell for the sixth consecutive month and from the Department of Labor that initial unemployment claims for last week reached "667,000, an increase of 36,000 from the previous week's revised figure of 631,000."

Q: Why are train wrecks so hypnotically fascinating?
A: If you are still watching the train, you haven't yet been slammed by the locomotive; you are still alive, limbs intact.