What Sort Of Rebound?


Greg Ip glances sideways at the recovery:

Yes, the economy is recovering, as everyone save the nihilists expected. However, the debate ought to be about the strength, not the fact, of the recovery. At the risk of gross oversimplification, the debate is this: do we follow the strong recovery model (the “V”) which holds that deep recessions are followed by strong recoveries, or the weak recovery model (the “U”) that holds that recessions caused by financial crises are followed by weak recoveries? I have long been in the latter camp. In fact, I describe my forecast as “reverse square root”, sort of a cross between a V and U (credit to George Soros for the term): an early cyclical rebound followed by muted growth. I’m still there.

Stock market chart from Doug Short.