CERAWeek: Economy: More pain before gain

Get three top economists together in this climate and there’s one place they really agree: The outlook is gloomy, at least through this fall if not into next year.
That was so obvious the experts kept a knowing silence for a few seconds after Daniel Yergin, chairman of the Cambridge Energy Research Associates, started off the evening’s discussion with, “So, gentlemen. Where are we?”
Nouriel Roubini, professor of economics and international business for the Stern School of Business at New York University, said we’re in the middle of a severe U-shaped recession. The economy won’t fall into a depression, but the timing of recovery depends on the policy response and how well fiscal policy is monitored.
Kenneth Rogoff, a professor of public policy and economics at Harvard University said what many have said before: We’re in the worst recession since the Great Depression, and he expects constructive growth to return next year.
“It’s unusual for a recession to last more than two years, that’s sort of the best way to look at it,” Rogoff said. “it’s going to be very slow coming out of it.”
Then Nariman Behravesh, chief economist with IHS Global Insight, said he would take the “glass is half full” view.
“This is the great recession, not the Great Depression and it is not Japan’s last decade,” he said.
The nation has social safety nets like bank deposit insurance that didn’t exist before the Depression. And while the government’s response to the banking crisis has been criticized as flawed, that response was rapid–unlike the seven years it took Japan to intervene after its crisis burst in the late 1990s.
“It may not be enough, but much bigger than anything that happened in Japan or the Great Depression,” Behravesh said.

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