Transcript

Study of economic history brightens one researcher’s view of the recession. From the University of Kansas, I’m Brendan Lynch.

As Mark Hirschey surveys the economic situation facing the U.S., he does so with keen awareness of the annals of finance and the stock market. Hirschey, the Anderson W. Chandler Professor of Business at KU, takes the long-range view on investments.

“The history of the U.S. stock market is slow, steady advance punctuated by sharp, irregular declines. We’re in a huge irregular decline right now, but that’s pretty rare.”

Hirschey finds much of the commentary on the U.S. economy to be overblown. For example, he said the present-day recession is nothing like the Great Depression.

“The old joke was that a recession is when your neighbor loses a job and a depression is when you lose a job. The Great Depression and the current economic situation have very little in common. During the Great Depression you saw unemployment of 25 or 30 percent. We presently have unemployment in the 6-plus percent range and people are concerned it might go to 8 percent. It very well might.”

In general, Hirschey has an upbeat outlook on the nation’s economic wellbeing, even in the current downswing. In fact, Hershey said that frequently it’s around the time when statisticians confirm a recession’s start that a recession comes to an end.

“The typical recession lasts less than 18 months. The National Bureau of Economic Research says we entered a recession in December 2007 — I believe it. If you look at history as a guide here, it would suggest that sometime between now and the Fourth of July in 2009, you’d expect business to once again turn up and start to reflect the basic strengths of the U.S. economy.”

For more examination of the recession, log onto Research Matters dot K-U dot E-D-U. For the University of Kansas, I’m Brendan Lynch.