Perceptions of the economy change quickly. Only a couple of weeks ago it seemed nearly everyone was spotting 'green shoots' of recovery all over the place. After receiving sobering reports this week on retail sales, unemployment insurance claims and industrial production, hopes of an imminent end to the recession appear to have been dashed.

According to Wall Street Journal's most recent survey of professional forecasters, economists by and large expect the recession to end by the third or fourth quarter of this year; however, few anticipate that the pace of growth coming off the bottom will be very strong. A recent IMF report suggests this may be the case by documenting the historical pattern that recessions stemming from financial crises last longer and give way to weaker recoveries than do "ordinary" recessions as ongoing bank deleveraging siphons capital from the system. In addition, when downturns affect global economies in a synchronized fashion, as is the case now, they can be protracted as capital and trade flows seize up.


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