We have previously reported that consumer demand for discretionary durable goods is now at recessionary levels after starting to contract on a year-over-year basis on January 15, 2010. On the surface this would indicate a "double-dip" recession following the 2008 economic event. We may have inadvertently promoted the "double-dip" aspect of 2010's contraction by often graphing the two events superimposed upon each other in our "Contraction Watch" chart -- as though they were independent episodes.
But to even a casual observer there is something unsettling in the above chart, especially if we've been told that the "Great Recession" was a once-in-a-lifetime event that required once-in-a-lifetime amounts of new national debt to fix. Clearly, the 2010 contraction already appears well on the way to equaling or exceeding the "Great Recession" in severity despite those "fixes."
By the end of August, the 2010 contraction had out-lasted the "Great Recession" in duration, and was contracting at a rate that we might expect to see only once in every 15 years. But it is highly unlikely that two fully independent contractions this severe would happen only two years apart -- just as the 1937 recession is not generally thought to be just another closely spaced severe recession, but is rather seen in the proper context.
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