Short Recession Confirms Hotter but Shorter Expansion
Comment of the Day

July 27 2021

Commentary by Eoin Treacy

Short Recession Confirms Hotter but Shorter Expansion

Thanks to a subscriber for this report from Morgan Stanley. Here is a section:

NBER confirms the shortest recession in history at just 2 months. From the day the recession began last year, we've been ahead of the consensus with the progression of this new cycle staring with the v-shaped recovery. It's all happening faster than normal and that means rotations and changing leadership is happening faster too. Our mid cycle transition starting back in March should now make more sense with historical comparisons as it typically begins about 9- 12 months after the recession ends.

Eoin Treacy's view

The response to the pandemic by central banks was a break from the norm. They looked at a developing situation and anticipated trouble ahead. That succeeded in preventing a crash and eased the significant pressure from a cessation of economic activity. The V-shaped recovery now raises a significant question for central banks. How long will they allow the economy to run ahead before withdrawing liquidity.

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