Spending and Saving

The Recession Will End… Not Until 2011!

Says who: The World Bank

“While the global economy is likely to begin expanding again in the second half of 2009, the recovery is expected to be subdued as global demand remains depressed, unemployment remains high, and recession-like conditions continue until 2011,” said Hans Timmer, Director of the World Bank’s Development Prospects Group. (via World Bank report)

Why it might be false: Governments worldwide have announced about $2 trillion in economic stimulus programs, and China targets GDP growth of around 8% this year, keeping it in a position to suck in more raw materials and capital goods. These efforts have been designed to stimulate global growth and demand, and they just might do it.

Why it could be true: With the flip of a hat, investors quickly demonstrated almost no confidence in the stock market and sent the Standard & Poor’s 500 Index to its lowest in two months, after the World Bank’s report was released, so at least some people are buying it. And amidst most sprouting “green shoots,” it’s not uncommon to hear forecasters’ worries about a jobless recovery.

Our call: With so many wild cards both in and outside of the U.S. economy, we wouldn’t be surprised if recession-like conditions remained after a theoretical recovery. It would be a little like the weather in New York City, where summer arrived in theory but the rains dampen the fun.

Tags: economy, recession, recovery, The Recession Will End..., World Bank