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If the US enters a recession, how many months will the economic contraction last?
The great recession of 2007-2009 was the longest lasting contraction in the US economy since 1929, lasting 18 months, peak to trough.
The good news is that the banking systems are probably more resilient than a decade ago, when the crisis struck, due to improved capital and liquidity regulations. Moreover, we now have an improved familiarity with the policy of quantitative easing (QE), the purchase of securities with newly created central-bank reserves aimed at lowering interest and stimulating expenditure.
However, with low policy rates, there is little room for monetary policy to manoeuvre in a recession without considerable creativity. Moreover, the fiscal policy outlook might be worrisome as well. Congress may have less room than it did during the Great Recession, with the country’s debt burden as a share of the overall economic output rising from 63 percent to 105 percent, and the US deficit to GDP now being 4.0%, compared to 1.1% in 2007.
If the US goes into a recession before 2032, how many months will the economic contraction last?
A recession is here taken to be a two consecutive quarters of decline in real GDP. The duration of the contraction is taken to be the number of months from peak to trough in economic performance, as defined by the NBER to be a combination of real Gross Domestic Product (real GDP) and real Gross Domestic Income (real GDI). This question will be closed retroactively at the end of the second quarter of decline in real GDP.
Data on durations of historical contractions in the US economy may be found at the NBER.
Edit: (20/02/19): if the US enters multiple recessions before 2032, this question will refer to the duration of the first one.
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