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What shaped recovery will this end up turning out to be?

Discussion in 'Stock Market Polls' started by bigbear0083, Mar 14, 2020.

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What shaped recovery will this turn out to be?

Poll closed Mar 23, 2020.
  1. V-shaped

    27.3%
  2. U-shaped

    0 vote(s)
    0.0%
  3. W-shaped

    54.5%
  4. L-shaped

    18.2%
  1. bigbear0083

    bigbear0083 Content Manager
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    Assuming we're in recession, which is marked down by 2 consecutive or more quarters of negative GDP prints, what do you all see the shape of this recession and subsequent recovery turning out to be?

    Here are your poll options:

    _______________________________________________________________________________________________

    V-shaped recession

    [​IMG]
    The Recession of 1953 in the United States is a classic V-shape.
    Source: Bureau of Economic Analysis

    In a V-shaped recession, the economy suffers a sharp but brief period of economic decline with a clearly defined trough, followed by a strong recovery. V-shapes are the normal shape for recession, as the strength of economic recovery is typically closely related to the severity of the preceding recession.

    A clear example of a v-shaped recession is the Recession of 1953 in the United States. In the early 1950s the economy in the United States was booming, but because the Federal Reserve expected inflation it raised interest rates, tipping the economy into recession. In 1953 growth began to slow, in the third quarter, the economy shrank by 2.4 percent. In the fourth quarter the economy shrank by 6.2 percent, and in the first quarter of 1954 it shrank by 2 percent before returning to growth. By the fourth quarter of 1954, the economy was growing at an 8 percent pace, well above the trend. Thus GDP growth for this recession forms a classic v-shape. More importantly, the GDP graph itself has a V shape.

    _______________________________________________________________________________________________

    U-shaped recession

    [​IMG]
    The Recession of 1973–1975 in the United States could be considered a U-shaped recession.
    Source: Bureau of Economic Analysis

    A U-shaped recession is longer than a V-shaped recession, and has a less-clearly defined trough. GDP may shrink for several quarters, and only slowly return to trend growth. Simon Johnson, former chief economist for the International Monetary Fund, says a U-shaped recession is like a bathtub: "You go in. You stay in. The sides are slippery. You know, maybe there's some bumpy stuff in the bottom, but you don't come out of the bathtub for a long time."

    The 1973–75 recession in the United States can be considered a U-shaped recession. In early 1973 the economy began to shrink and continued to decline or have very low growth for nearly two years. After bumping along the bottom, the economy climbed back to recovery in 1975.

    _______________________________________________________________________________________________

    W-shaped recession

    [​IMG]
    The early 1980s recession in the United States is sometimes given as an example of a W-shaped recession.
    Source: Bureau of Economic Analysis

    In a W-shaped recession, (also known as a double-dip recession), the economy falls into recession, recovers with a short period of growth, then falls back into recession before finally recovering, giving a "down up down up" pattern resembling the letter W.

    The early 1980s recession in the United States is cited as an example of a W-shaped recession. The National Bureau of Economic Research considers two recessions to have occurred in the early 1980s.[4] The economy fell into recession from January 1980 to July 1980, shrinking at an 8 percent annual rate from April to June 1980. The economy then entered a quick period of growth, and in the first three months of 1981 grew at an 8.4 percent annual rate. As the Federal Reserve under Paul Volcker raised interest rates to fight inflation, the economy dipped back into recession (hence, the "double dip") from July 1981 to November 1982. The economy then entered a period of mostly robust growth for the rest of the decade.

    The European debt crisis in the early-2010s is a more recent example of a W-shaped recession. A combination of government austerity, falling business investment, rising interest rates, global economic weakness, high energy prices, and weak consumer spending after the Great Recession of 2008-2009 tipped many Eurozone countries into a second recession from 2011 to 2013. Countries affected included Italy, Spain, Portugal, France, Ireland, Germany, Cyprus, and Portugal. Greece, while part of the Eurozone, saw continuous economic contraction from 2007 to 2015, and thus does not fit the definition of a W-shaped recession, but rather an L-shaped recession. The United Kingdom is not a member of the Eurozone, but is a member of the European Union, and suffered a minor W-shaped recession when GDP contracted in Q4 2011 and Q1 2012.
    _______________________________________________________________________________________________

    L-shaped recession

    An L-shaped recession or depression occurs when an economy has a severe recession and does not return to trend line growth for many years, if ever. The steep drop or degrowth, is 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".

    [​IMG]
    The Japanese asset price bubble led to a Lost Decade in Japan; this period has been characterized as an L-shaped recovery.
    Source: Penn World Tables

    A classic example of an L-shaped recession occurred in Japan following the bursting of the Japanese asset price bubble in 1990. From the end of World War II throughout the 1980s, Japan's economy was growing robustly. In the late 1980s a massive asset-price bubble developed in Japan. After the bubble burst the economy suffered from deflation, and experienced years of sluggish growth; never returning to the higher growth Japan experienced from 1950-1990. After the late-2000s recession in the United States followed a similar economic bubble (the United States housing bubble) some economists feared the U.S. economy could enter a prolonged period of low growth even after recovering from the recession. By 2013, however, U.S. GDP growth rebounded, allaying fears of stagnation.

    The Greek recession of 2007–2016 could be considered an example of an L-shaped recession, as Greek GDP growth in 2017 was merely 1.6%. Greece technically suffered through four separate, but compounding, periods of contractions over the 9 year period.

    _______________________________________________________________________________________________

    Feel free to also add any other commentary along with your vote. Would be cool to get some thoughtful discussions on this topic. :D

    [​IMG]
     
  2. Vdubman

    Vdubman Active Member

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    W shaped because immediate earnings will be very much higher than expected due to all the panic buying. Market will recover some then dump again because fy forecasts will be dramatically cut and BK’s announced. Eventually a good but not great recovery will slowly happen as everything gets under control and consolidation occurs from larger firms with more capital acquire the weaker businesses.
     
  3. StockJock-e

    StockJock-e Brew Master
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  4. kyleh2k20

    kyleh2k20 New Member

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    Tough call. But will also go with the double dip.

    W-shaped.
     
  5. Three Eyes

    Three Eyes 2018 Stockaholics Contest Winner

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    We're going Straight to L in a Hand-basket. ;)
     
  6. rStock

    rStock Well-Known Member

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    V-shaped
     
  7. hitman

    hitman Active Member

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    I say V shape
     
  8. stock1234

    stock1234 2017 Stockaholics Contest Winner

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  9. bigbear0083

    bigbear0083 Content Manager
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    i'm kind of torn here honestly cause like i feel like we can V this right back, but then i just don't really know the repercussions of all the things that are going on this month. it's really a lot to chew on, and sometimes waaaay over my head trying to make sense of all of it if i'm being wholeheartedly honest.

    with that said, i'll guess W-shaped recovery as well.
     
  10. stock1234

    stock1234 2017 Stockaholics Contest Winner

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    Actually I want V since it probably mean the virus will be contained sooner rather than later :mad:
     
    JaysonW and bigbear0083 like this.
  11. hitman

    hitman Active Member

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    I think the faster we get to about 16000 or 17000 which could be the bottom then we see a violent swing to about 30000 hedge funds are liquidating some have taken huge losses eg Bridgewater, Ack is just about to bring out his hanky and start crying.
     
  12. bigbear0083

    bigbear0083 Content Manager
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    i see some of you did not post your votes in this thread, so i'll just do that now before i close this poll.

    @JaysonW: V-shaped

    @Stoch: W-shaped

    @Steven_Burt: L-shaped
     

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