Socialist Economic Bulletin has explained the reasons why it analyses that the world is not facing an economic depression, that is a severe fall in output that continues for very many years without recovery, but a severe recession.
Put in terms of analogies, which are never exact, it means the UK faces something as bad as, or more probably somewhat worse than, the early 1990s but not the 1930s. But that should not lead to any illusions as to how bad it is going to get. It will be very very unpleasant as an excellent article in The Times this morning, analysing the latest US economic data, indicates.
Suzy Jagger notes: 'the worst level of [US] consumer confidence since records began in 1967 and the sharpest annual fall in urban house prices on record... house prices across the 20 cities surveyed fell by 16.6 per cent in August compared with the same period the year before.
'The fall is the steepest on record, with Las Vegas, Miami, Phoenix and San Francisco, among others, suffering declines of between 25 per cent and 30 per cent. Economists interpreting the data reckoned that the American housing slump is only half way through with another year to run before there is any glimmer of recovery. August prices slipped 1.1 per cent compared with July, marking five months of uninterrupted declines for the cities surveyed.
'At the same time, US consumer confidence in October slumped to its lowest for 41 years... Ian Shepherdson, chief US economist at High Frequency Economics, described the consumer confidence figures as extraordinarily awful. Americans have all but stopped spending on discretionary items such as cars because they are scared of losing their jobs and anxious about the declining value of their homes... Confidence has also been damaged by the 28 per cent slide in US stock markets over the past two months as the banking system seized up. The fall on equity markets has hit the value of pension pots and investments. Worse, economists are forecasting continued double-digit declines for the US housing market for at least another year.
Dimitry Fleming, US economist at ING, the Dutch bank, said: “Despite a reduction in the number of homes for sale, supply is still enormous. We expect no end to the price declines till end 2009.”'
Read Suzy Jagger's full analysis here.