3/31/2009

A Possible Turnaround

Fed’s Stern: Expects Some Econ Improvement Midyear
Gary Stern who has been through the previous two recessions as head of the Minneapolis Federal Reserve Bank offers a few words of encouragement towards the possible end of the current recession. As we have discussed in class it is hard to predict when recessions end and the economy picks up again, and normally don't have evidence until well after the event takes place. That being said, as the first quarter of draws to an end there seems to be initial signs that by midyear things could be turning around. March seemed to be a great month for the Dow-Jones-finding many stocks hitting lows and now rebounding well. Other reports show that while many retailers have offered, and continue to offer great deals, their are faint signs that pickup in the consumer spending trend should continue. With the G-20 summit looming with loud cries from several governments calling for increased regulation over companies with multinational financial risks, time will tell how strong this possible turnaround may be.

6 comments:

Sophia said...
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Sophia said...

Wouldn't it be great if we really could know. Two nights ago, I overheard my visiting uncle tell my brother that "the markets are supposed to be down tomorrow." I couldn't help but laugh based on our discussions in class, but sure enough, the markets took a beating the very next day. Maybe he should be interviewed on MSNBC.

Having said that, it does seem as though many signs are pointing to yes. It is nice to see some green numbers up on the ticker board every once in a while. If nothing else, many people on the news are starting to be a little more optimistic. Now I can watch something besides ESPN without wanting to bury my head in a hole.

Gracie said...

Although I agree that the economy is starting to show some signs of improvement, I wonder what the G-20 really has to do with it. There is no real power in the organization. While ideas and issues are discussed, it is plausible that the G-20 is just a conversation of empty promises.

anthony said...

That's absolutely true; we have definitely witnessed what appears to be a turnaround. It is very difficult to call a bottom, but the evidence appears to say it's likely we're in it.

chase said...

I am curious exactly what Gary Stern is basing his analysis off of. I know the article has said that he has been through a couple of recession prior to this one, but it really didn't touch on specifics of how he expects the economy to turn in the near future. Yeah, that would be awesome if the economy would pick up life would be much easier.

Dr. Tufte said...

-1 on Carson for a grammatical error.

One word of warning: Gary Stern is a big-time optimist.

A second one: don't spend so much time watching the markets for information about macroeconomics.

Sophia: your uncle had a 50/50 chance of being right. His prediction is not that specific.

Having said that, you can often get a sense of where our markets are going tomorrow, by looking at where the Asian markets are going when ours are closed.

Chase: beyond Gary Stern being an optimist, he's very much in the neo-classical school that recessions are a natural process that can't go on indefinitely. His worldview is that we just have to wait things out, and that this recession has run just about as long as it can.