It's Not Just About Length, Ladies

Many ask, "How Long will this Recession Last?"
If payrolls fall by 1 job, consumer spending falls by 1 cent, home prices fall by $1, investment accounts fall by 1%, etc., then we are in recession. This type of recession could last for years, but would it really be that bad?

Depth Matters
An updated official estimate of economic activity said Q4 (Oct-Dec 2008) GDP fell 6.8%. A month ago, that estimate was 3.8%. In other words, the recession is deeper than what officials had initially measured. A recent survey revealed that economists were expecting a 5.4% decline. In other words, the recession is also deeper than what was expected.

Among other things, a deeper recession means more jobs are being lost and less money is being earned.

How Many Hairs are Attached to This Thing?
Think of the recession like you would a Brazilian wax. If you pull the waxing strip slowly, it will last a long time. If you pull it quickly, the pain is substantial but it's over quickly. Regardless, the number of hairs attached to the strip also reveal something about how much pain you will feel.

Recessions take the economy to a base level from which growth can start again. There's a bottom somewhere. We can get there quickly, or we can get there slowly. (Many, including myself, would argue it's better to get there quickly.) But remember, it may be just as important to ask "where is that bottom?" as it is to ask "when will we get there?".