Economist: Six years into a lost decade
BEA: GDP: Revised estimates (news release and pdf)
From the fourth quarter of 2007 to the first quarter of 2011, real GDP decreased at an average annual rate of 0.2 percent; in the previously published estimates, real GDP had increased at an average annual rate of 0.2 percent.NYT: Double Dip Recession May Be Happening
FRED
If this is the beginning of a new double dip, it will have two significant things in common with the dual recessions of 1980 and 1981-82.
In each case the first recession was caused in large part by a sudden withdrawal of credit from the economy. The recovery came when credit conditions recovered.
And in each case the second recession began at a time when the usual government policies to fight economic weakness were deemed unavailable. Then, the need to fight inflation ruled out an easier monetary policy. Now, the perceived need to reduce government spending rules out a more accommodating fiscal policy.
Krugman: The Wrong Worries
Not only are vast numbers of Americans unemployed or underemployed, for the first time since the Great Depression many American workers are facing the prospect of very-long-term — maybe permanent — unemployment. Among other things, the rise in long-term unemployment will reduce future government revenues, so we're not even acting sensibly in purely fiscal terms.
Krugman: Notes on the Un-recovery
My main answer — Brad DeLong has also written on this — is that 2007-2009 was a postmodern recession brought on by private-sector overreach, very different from pre-1990 recessions that were brought on by tight money. This has two consequences. First, it's much harder to engineer recovery from a recession that wasn't created by the Fed; in 1982 all the Fed had to do was loosen the reins, now somebody has to persuade someone to spend more than normal. Second, forecasting models tend to be based on all postwar recessions, not just the 1990 and later postmodern recessions, so they tend to predict a much faster recovery than was ever likely.
Krugman: Job prospects
What this shows (you have to squint a bit) is that earlier recessions were preceded by sharp rises in interest rates, as the Fed tried to choke off inflation. This produced a housing slump, with a lot of pent-up demand; when the Fed decided that we had suffered enough, it relented, and both housing and the economy sprang back.
But later recessions took place in a low-inflation environment, in which booms died natural deaths from overextended credit and overbuilding. Getting the economy growing fast enough to bring unemployment down after these recessions was therefore much harder, since the usual channel of monetary policy — housing — lacked any pent-up demand.
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