“Economic cycles associated with financial traumas such as banking crises or asset price collapses tend to have deeper downturns and weaker upturns. The current uptrend in US economic growth should be sustained, but the rebound will remain subdued compared to recent recoveries,” said BCA Research.
The chart below illustrates the typical recovery patterns following financial and non-financial recessions respectively. As they say, a picture paints a thousand words … Should the after-effects of the financial crisis indeed remain a serious headwind to economic growth, policy conditions should remain favorable for risky assets.
Source: BCA Research – Daily Insights, January 6, 2010.
