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Not Crying Wolf

Martin Wolf has another great column in today's FT entitled "Struggling with a Great Contraction," where he sees so much about the US so much more clearly:

"The authoritative National Bureau of Economic Research of the US does define a recession as 'a significant decline in economic activity spread across the economy, lasting more than a few months.' This is to focus on the change in output, rather than its level. Normally, that makes sense. But this recession is not normal. When economies suffer such steep collapses, as they did during the worst of the crisis (the peak to trough fall in gross domestic product having varied between 3.9 per cent in France and 9.9 per cent in Japan), an expansion that fails to return output to the starting point will not feel like recovery. This is especially true if unemployment remains high, employment low and spare capacity elevated. In the US, unemployment is still double its pre-crisis rates."

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