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Friday, November 18, 2011

The L-Shaped Economic Recovery

Last month the White House indicated that, due to policy mistakes, the U.S. is in an L-Shaped economic recovery instead of a V-shaped economic recovery.

I had indicated in April 2009 in a comment on a Wall Street Journal article that we might be facing an L-shaped recovery rather than a U or V Shaped recovery.

In response to an initial comment regarding the economy and how we were facing a U-Shaped economic recovery as opposed to a V-Shaped economic recovery I stated:

The real concern should not be whether it is a U shape or a V shape, but whether or not it is a L shape. Note the IIF mentions the concerns about the high debts and deficits of many governments (not to mention many corporations). Concerns about recovery in the medium term might mean slow growth for years as governments struggle with a mountain of debt.

2 and a half years later it looks like my statement is bang on. I'll admit I did use the word 'might' but overall, this is correct today as acknowledged by the White House last month.

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