Worst Recession since the 1930s?
Given the serious disadvantages that the U.S. suffers as it heads into recession in 2000 versus 1930, the conclusion reached by The Levy Institute Forecast and Macroeocnomic Profits Analysis in its January 2001 report is not surprising: “Overall, the present situation involves the most formidable financial dangers since the 1930s.” This is not an opinion to be taken lightly as the Levy Institute has been making economic forecasts since 1949 with a record The New York Times describes as, “one of the best records in the country for predicting turning points of the business cycle in the United States for the last 40 years.” Given the differences in preconditions, what is the likely outcome? Below we chart two possible outcomes. They are not mutually exclusive. In fact, the most likely case is that these outcomes represent two phases in a progression of events. Both cases assume that reflation efforts will be ineffective as a means of restarting growth in the U.S. economy, although these e
