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News Link • Economy - Economics USA

Consumer Metrics Institute: Economy Has Been Contracting For 185 Days

When the most recent period of contraction in our 'Daily Growth Index' (January 15, 2010 to date) is charted along with the similar 'Daily Growth Index' contraction events from 2006 and 2008 (with the first day of each contraction aligned on the left-hand axis) the relative severity of each contraction can be visualized. One measure of the true severity of an economic slowdown is the 'area under the curve' (or 'above' the curve in this case) swept out by the 'Daily Growth Index' over time. This area is just the average magnitude of the decline times the duration of the contraction event. During the 2006 slowdown this area was about 136 percentage-days of contraction, while the 2008 event was much more severe at 793 percentage-days. The 2010 event has now reached 288 percentage-days, over twice the severity of 2006 and well over a third of 2008 'Great Recession' -- and it is still growing. The key point to notice in the above chart is that if the current 2010 curve continues its current course, in about 20 days the 2010 slowdown will be more severe on a day-to-day basis than the 2008 'Great Recession' was at the same point in its respective evolution.

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