James Grant of Grant’s Interest Rate Observer wrote a major piece in the Wall Street Journal over the weekend about the recovery path after recessions. His rule of thumb goes something like this: the bigger the drop in GDP, the sharper the recovery. He also discusses the amount of monetary and fiscal stimulus that the economy has been given this time around relative to previous recessions. Unlike most economists, who are calling for a feeble, prolonged recovery, Mr. Grant argues that we could have a sharp, powerful burst off the bottom. I don’t know which scenario will come to pass, but if one’s investments have been structured based on a different sort of guess, any wildly different recovery path could play havoc with the portfolio. It’s nice to read a more refreshing version of the future, but it just reinforces our policy of responding to trends rather than worrying about forecasts.
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I subscribe to the WSJ and did not see this article referencing James Grant. Can you tell me please what page this is on and what date. Your timely response is appreciated.AW.
If you click on the link included in the blog piece, it brings up the entire article. The date is displayed on the article. The date is September 19. I believe it was part of the Weekend Journal section, but I could be mistaken about that.
You can read it here, great takes! http://online.wsj.com/article/SB10001424052970204518504574420811475582956.html