Are you tired yet of the debate about whether or not we are
in, or might even already have entered, a recession? Given that nobody
knows and nobody can know, the whole thing seems
a little bit pointless to me. But at least we’ve moved on from the
point at which economists were talking about the oxymoronic entity
known as a “growth recession”. Or have we?
Gaffen has found some research from Wachovia which takes the
dreadful “growth recession” concept and makes it even worse, by
smushing it down into a “grocession”. The original paper can be found here,
and it’s gruesome stuff, defining a grocession as a “new and
unprecedented economic phase” of low growth which continues for some
years, and then saying that “we assign grocession a 50% probability”.
Yeah, despite the fact that such a thing is “unprecedented” and
therefore has never happened in economic history.
Underneath the sillliness, however, there is an interesting
idea straining to escape: that we might be moving from a relatively
high-growth Great Moderation into a relatively low-growth Great
Moderation. Up until now, credit has been hit much more severely than
equities; if this thesis holds water, that might be exactly the wrong
way around. But still, as the immortal David St Hubbins once said,
“it’s such a fine line between stupid and clever”.