by Laura Conaway

Hello, synchronous recession. The International Monetary Fund gives a preview of its semiannual World Economic Outlook today. It's grim:

The duration of a synchronous recession is, on average, nearly 1.5 times as long as the duration of the typical recession. Recoveries are usually sluggish, owing to weak external demand, especially if the United States is also in recession: during the 1975 and 1980 recessions, sharp falls in U.S. imports contributed to a significant contraction in world trade.

 

The analysis suggests that the combination of financial crisis and a globally synchronized downturn is likely to result in an unusually severe and long lasting recession. This combination is historically rare, and inferences should be drawn cautiously. Nonetheless, the fact that the current downturn is highly synchronized and associated with deep financial crises suggests that it is likely to be persistent, with a weaker-than-average recovery.