As often mentioned in this Weekly, we see this recession as “L” shaped, by which we mean that GDP, still falling, will eventually reach a bottom and then stay there for years, not just months. The reason for this gloomy, but realistic expectation is that households in the USA and elsewhere will take many years to repair their “balance sheets”; they will not be ready to spend beyond their means for all this time. David Rosenberg of Merrill Lynch supports this scenario, but lays down three benchmarks for recovery. |
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