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Saturday, March 06, 2010

Christopher Thornberg on Double Dip Recession

by Calculated Risk on 3/06/2010 03:16:00 PM

One of the economists who correctly forecast the housing bust was Christopher Thornberg while at The Anderson School at UCLA. He is now at Beacon Economics. Here are a few comments from Thronberg yesterday ...

From the Contra Costa Times: State's revised jobless rate a cause for worry

[T]he nation and California could tumble back into a fresh economic nose-dive, warned some analysts, including Christopher Thornberg, partner and economist with Beacon Economics.

"There is a substantial chance of a double-dip recession," Thornberg said.
"We're at the bottom now right now, but when the stimulus wears off, things could get worse," Thornberg said.
And from Jane Wells at CNBC: 'The Good News—The Recession is Over. The Bad News...'
[Chris Thornberg] says that the recession has ended (hurray!), but that's mostly due to massive government intervention. When that aid starts to dry up, "We're gonna have a double dip...but that's not gonna happen."


He says politicians and the Fed will likely continue fiddling with policy to avoid going back into recession ...

"Enjoy 2010 because it's going to be a good year. 2011 is not." [Thornberg said]. When I asked about 2012, he answered, "It depends how bad 2011 is."
I disagree with Thornberg on 2010 - I don't think it will be a "good year", but I do think we will see sluggish and choppy growth. I suppose 2010 might feel like a "good year" compared to 2008 and 2009. He is also more pessimistic about 2011 than I am.