Drop in Euro Zone Industrial Production Shows Recovery Is in No Hurry
While many economists agree that a recovery my be near, most seem to think that there will be nothing startling about it — and a euro zone industrial production report issued today supports that view. the Financial Times reports today that the 16-nation market's economic recovery hopes were set back by an unexpectedly sharp decline in industrial production in April, suggesting that the region's "recession is only slowly losing its ferocity."
Other regions, too, are feeling a roller-coaster effect from indicators sending mixed signals. In the United States on Wednesday, a Federal Reserve report said that economic conditions remained weak during mid-April through May. Conditions deteriorated in many regions of the country, the survey found, as commercial real estate and labor markets continued to struggle. Still, new claims for unemployment benefits have declined for several consecutive weeks in the U.S.
In an article in the most recent issue of Knowledge at Wharton, several Wharton professors expressed fairly pessimistic views about the recovery — saying that positive growth may not be here yet, and that even when it does arrive, it will probably take several years for employment rates to return to so-called normal levels. Even if the U.S. gross domestic product turns positive by the end of 2009, they note, the economy will remain close to the bottom of the large trough that began in late 2007, with a long way to climb for jobs, home prices and other key economic indicators just to get back to where they were.
More on the economy from Knowledge at Wharton:
Deflation Fears: Could Falling Prices Let the Air Out of a Recovery?
Why Economists Failed to Predict the Financial Crisis
Hope, Greed and Fear: The Psychology behind the Financial Crisis