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It's too early to make any firm conclusions about the potential direction of the recession

Jeegar Kakkad June 23, 2009 16:06

A couple of weeks ago, the Financial Director at a manufacturing company in Crawley took me to task for suggesting that the economic outlook had stabilised. He said the only thing that's happened is that the "second derivative has turned positive".

Now for the non-engineers, -mathematicians and -economists, that translates to 'the pace of contraction is slowing' or in plain english 'things are still getting worse, but we ain't in freefall anymore'.

Well, now Free Exchange is poking fun of an FT article that says "Eurozone recovery loses momentum":

"Now recovery, in this case, must be taken to mean a declining rate of contraction, since the European economy has not yet begun expanding outright. This therefore means that the FT is warning us about the rate of change of the rate of change of the rate of change of output. The European economy is contracting, and it's contracting more slowly than it was, but the slowing rate of decline is experiencing a deceleration, or something.

They might have just said that the bottom is not quite as close as some had recently hoped, no?"

In geek speak, that means the third (or maybe even the fourth) derivative is negative.

To you and me, it just means the recession has further to run.

 

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