Payroll data: Yeah, we're in a recession
Can we stop saying now that financial troubles "might" tip us into a recession? As this morning's employment numbers (and a lot of other data in recent days) make clear, we're in a recession. I'm still betting that the arbiters of such things will eventually decide we've been in a weird, mild recessiony kind of thing since last fall. Now the weird and mild (and the y) appear to be disappearing. We're in a recession. The question that remains is how bad it's going to be.
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There are at least two questions remaining: how severe and how long will this recession be.
From my comfortable armchair, we've been deferring a recession since about 1995 through one unsustainable scheme or another. Now that that long-avoided discomfort is inevitable, will our monetary policy be to take the pain quickly and get through the contraction, or will we drag it out for years or decades by trying to come up with another scheme?
Several kinds of investments need to finish failing before we're through this. Housing prices need to finish correcting. All investments derivative of those crazy house prices need to follow. This includes the bankruptcy proceedings of a very large number of overextended American homeowners.
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