Silly Idea of the Day: Grocession

Are you tired yet of the debate about whether or not we are

in, or might even already have entered, a recession? Given that nobody

knows and nobody can know, the whole thing seems

a little bit pointless to me. But at least we’ve moved on from the

point at which economists were talking about the oxymoronic entity

known as a “growth recession”. Or have we?


Gaffen has found some research from Wachovia which takes the

dreadful “growth recession” concept and makes it even worse, by

smushing it down into a “grocession”. The original paper can be found here,

and it’s gruesome stuff, defining a grocession as a “new and

unprecedented economic phase” of low growth which continues for some

years, and then saying that “we assign grocession a 50% probability”.

Yeah, despite the fact that such a thing is “unprecedented” and

therefore has never happened in economic history.

Underneath the sillliness, however, there is an interesting

idea straining to escape: that we might be moving from a relatively

high-growth Great Moderation into a relatively low-growth Great

Moderation. Up until now, credit has been hit much more severely than

equities; if this thesis holds water, that might be exactly the wrong

way around. But still, as the immortal David St Hubbins once said,

“it’s such a fine line between stupid and clever”.

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