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Source:
2nd Quarter 2009 Economic Commentary and Outlook
Andrew Horowitz, CFP
Kevin Hoffmann
http://www.horowitzandcompany.com/
Consumer Credit outstanding fell $14.8b in Sept seasonally adjusted, almost $5b more than expected and marks the 11th month in the past 12 of declines. At $2.456T outstanding, it is 4.9% below the record high in July '08. After a flat reading in Aug, (didn't fall b/c of the CARS program), non revolving debt outstanding fell by $4.9B. Revolving (mostly credit cards) balances outstanding fell by $9.9B. To fully put into perspective today's data, look at the current level of consumer credit (doesn't include mortgages, the biggest chunk of consumer credit) relative to GDP. As of Q3, it totaled 17.2%...
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April 21st, 2009 at 9:14 pm
Any ideas why recessions last longer (on average) since 1933? The ability of fiat currencies to allow imbalances to persist longer? Reluctance of policy makers to make tough choices (seizing/nationalizing insolvent TBTF/TBTS institutions)? The general direction of economics (trickle down, supply side…), post war era?
April 21st, 2009 at 9:26 pm
I would argue that “average” is the wrong statisitical measurement to apply to this data set — the average is being significantly skewed by the recessions lasting 1977 and 1308 days. A better statistical measurement to apply to this data set would be median.
Some results:
median 397 (for entire set of data)
Also, post-1933 the average recession was 330 days (not pre-1933 as indicated on the graph).
April 22nd, 2009 at 11:51 am
Kevin makes a good point – median is better than mean when outliers are the way they are.
There is also the issue of severity. 2001-2006 was quite a mild “recession” by the metric of employment – see for example the Pelosi “scare graph” (http://short.ie/recess1 or http://short.ie/recess2).
Incidentally, the 1870s episode is well worth investigating in more detail (cursory overview here, http://en.wikipedia.org/wiki/Long_Depression). That recession practically lasted 20 years. Hopefully, if we learnt the importance of domestic fiscal response between 1870 and 1930, we have now learnt the importance of the monetary response and the importance of keeping global trade channels open since the 1930s.