"The economy appeared to be in free fall, much like a ball rolling off the side of a table,in October. Today, no one will describe the economy in that way" Larry Summers 4/9/09 (President Obama's Top Economic Advisor).
At first sight, the quote does seem to instill hope. Here are a couple of thoughts:
1) do we know (or care) how far the ball dropped?
2) Is it time to celebrate -- or do we care how the ball gets back up onto the table?
Today there are some answers: Floyd Norris reports that, as of May 21, 2009, it is now official: the US has entered the worst recessionin five decades (this is how as long as we happen to have data).
Jeff Frankel notes that, as of April 29, 2009, the current recession is also tied for the longest recession since the great depression. On the other hand, another economic measure (the index of leading indicators) reversed its downward trend for the first time in about a year. Time to pop the champagne?
Not so fast: Barry Eichengreen and Kevin H. O’Rourke document that even during the great depression, the ride was never monotonically down hill. Their report (especially their figure/discussion on global tradeflows) is well worth reading.
Paul Krugman explains lucidly why the news that we may havehit bottom is probably only an "inventory bounce." That not the type of data we associate with "getting the ball back up onto the table."