The GDP Equation
By John Mauldin
October 12, 2007
1192201237
The GDP Equation
How Low Can You Go?
The Key Variable Problem
The Importance of Fiscal Policy
The Slow Motion Recession
New Orleans and More Birthdays
A recession is technically defined as two consecutive quarters of negative growth in the Gross Domestic Product (GDP). This week we look at how the GDP is actually calculated to give us an idea as to the potential for a recession. We re-visit my concepts of a Slow Motion Recession and a Muddle Through Economy. We briefly look at the sliding dollar and housing, and see how it all adds up. You'll need to put your thinking caps on, but it should be interesting.
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How Low Can You Go?
The dollar is continuing its slide. In a recent article in the Financial Times, Fred Bergsten suggested the dollar could slide another 15-20% on average. Dr. Woody Brock (see more on him below) sees the potential for another 5-10% drop.
Bergsten writes: "The good news for Europe is that most of the remaining decline of the dollar should take place against the currencies of the East Asians and the oil exporters. They are running the counterpart surpluses to the US...
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