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April 15, 2008

When do recessions end?

Most economists now say the economy is in a recession? If this is the case, then the big question is, How long will the recession last and what will be the spark to end it? Listen

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"If we go by recent recessions, the recession will last about a year. There's some indication that if, indeed, we are in a recession, it may have begun in the fall, let's say October. If accurate, that means we should be coming out of this downturn sometime in the late summer or early fall. Now, what is it going to take to bring us out of the downturn or recession? Well, really this is where we mix psychology and economics, because it really takes a change in people's attitudes, and what we have to have happen is, people are looking at the economy, they're looking, for example, at depressed real estate prices, they're perhaps looking at bargains in the stock market. They're looking at business opportunities. They're saying, 'Ok, I think things have bottomed out. I now have to buy. I have to go invest in that rental house. I have to buy stocks. I have to take advantage of business opportunities because it's just too good to pass up. Prices are too low. The opportunities are too high.' And so it really takes that kind of mass attitude. And it starts small and then spreads. And that's really what brings the economy out of a recession. So really, psychology is the key."

Posted by Dave at April 15, 2008 07:54 AM