Economist: ‘Great Moderation’ will keep country from recession

NORWICH – If there is a recession due to the subprime fallout, it won’t last long, one economist predicts.

“If we do have a recession, it will be moderate – not very long, not very deep,” said Dr. Edmond Seifried, an economics professor at Lafayette College and finance analyst for a consulting firm in Pennsylvania.

Seifried, who has been published numerous times and lectures across the country, was the special guest speaker Tuesday morning before a crowd of 70 to 80 who attended Commerce Chenango’s Economic Forecast Breakfast held at the Canasawacta Country Club in North Norwich.

The professor said he expects there might even be some positive growth by year’s end, if only 1 or 2 percent, and inflation could even go down.

That’s after the subprime mortgage crisis gets worse in the coming months, he contends.

How? Because of something called the “Great Moderation” theory. Seifried says it’s the emerging idea that the U.S. economy, since roughly 1984, has been able, and will continue to be able, to protect itself and shake off setbacks that in years past would have sent the country into a tailspin.

In short, the economy – specifically inflation and the stock market – is significantly less volatile; by 60 percent, some estimate. The proof, Great Moderation supporters say: There hasn’t been a recession in 18 years, when there used to be one every four or five.

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