Recession of 2009/Addendum

Recent economic developments

2008 4th quarter

World

G20 leaders agree on need for fiscal stimulus [1]

The United States

output falls gdp falls at an annualised rate of 6.2%

unemployment rate the highest for 14 years - 6.7% in November 2008[2].

consumer prices record falls - by 1% in October [3]and 1.7% in November [4]

Federal Reserve Bank's $800 billion support package [5]

Federal Reserve Bank buys mortgage-backed securities - Bank promises to buy up to $500 billion worth of mortgage-backed securities guarantee by Fannie Mae and Freddie Mac and up to $100billion worth of their direct debt [6].

Federal Reserve Bank's quantitative easing - Open market purchases raise base money (the Bank's balance sheet total) from $0.9 trillion to $2.2 trillion [7]

national debt reaches 72.5% 0f GDP[8]

The United Kingdom

output falls - gdp falls by 0.5% between second and third quarters of 2008 [9] and by 1.5% between 3rd and 4th quarters [10].

Budget stimulus - discretionary public expenditure of 1.1% of GDP [11][12]

national debt reaches 43.6% of GDP [13]

Asia

recession in Japan GDP fell 3.3% from Q3 to Q4 2008 [14].

developing countries in recession GDP probably fell by an average annualised rate of around 15% in Hong Kong, Singapore, South Korea and Taiwan [15]

2009, 1st quarter

World

G7 Finance Ministers endorse fiscal stimulus policy [16]

The United States

Rising unemployment - 7.6% in January, 8.1% February.

$1.2 trillion 2009 budget deficit - forecast by the Congressional Budget Office [17]. (Government spending expected to rise to 23% of GDP [18])

President-elect Obama proposes major fiscal stimulus - in his speech of 8 January [19].

Congress approves stimulus package - American Recovery and Reinvestment Act(H.R. 1) - a $839 billion stimulus package

Fears of Trade War – America First Steel Act, Homeland Security Comm. approves bill requiring federal agencies to use U.S. steel for public works projects, (HR 5935) [20] [21]

Eurozone

Discount rate cut from 2.4% to 2% [22]

United Kingdom

Discount rate cut - from 2% to 1.0% [23].

IMF endorses policy IMF Deputy Managing Director says "There is no unique weakness in the UK economy, and we believe the measures taken ...will strengthen the economy over the medium term "[24].

Asset protection scheme[25]

Asia

Japan's exports in January 56% less than in January 2008

2009, 2nd quarter

United Kingdom

Bank of England Reduces Bank Rate by 0.5 percentage points to 0.5% and announces £75 Billion Asset Purchase Programme [26].

Forecasts and outturns

Annual percentage growth in Gross Domestic Product

(forecasts are shown in italics)

Date	Source	Country	2007	2008	2009	2010	2011
22 December 2008	World Bank [27]	United States	2.0	1.4	-0.5	2.0
		Japan	2.1	0.5	-0.1	1.5
		Euro area	2.6	1.1	-0.6	1.6
		China	12	9.4	7.5	8.5
		Developing	6.1	5.0	2.9	4.7
		World	3.7	2.5	0.9	3.0
28 January 2009	International Monetary Fund [28]	United States	2.0	1.1	-1.6	1.6
		United Kingdom	3.0	0.7	-2.8	0.2
		France	2.2	0.8	-1.9	0.7
		Japan	2.4	-0.3	-2.6	0.6
		China	13	9	6.7	8
		World	5.2	3.4	0.5	3.0
7 March 2009	Economist Poll [29]	United States			-2.2	1.9
		United Kingdom			-2.6	0.5
		France			-1.7	0.7
		Germany			-2.5	0.8
		Japan			-3.2	0.8