GDP: Time to worry about the ‘L shaped’ recession again?
We’ve been told today that over the past six months the economy has ‘flat lined’, ‘stagnated’ and been ‘on a plateau’.
All of which is true.
But sometimes a picture really is worth one thousand words.
How long until we start talking about ‘L shaped’ recessions again?
An L-shaped recession occurs when an economy has a severe recession and does not return to trend line growth for many years, if ever. The steep drop, followed by a flat line makes the shape of an L. This is the most severe of the different shapes of recession. Alternative terms for long periods of underperformance include “depression” and lost decade; compare also “malaise“.