This is a good time that economists are lost, surprised that they were, like you and me, by the seriousness of the crisis. Today, the questions remain open. How far will plunge the recession Nobody knows nothing. When the recovery will come Mystery. What is the scope Ball gum. However, it is a question that has an answer: that's how. We know, grosso modo, what mechanisms will get out us, one day, the hole. These engines of recovery are two: the stimulus and the decline in the price of oil and raw materials.
Stimulus plans are in the course of development, power sometimes very strong (China, 2 of GDP, yet the details missing) or simply strong (Japan, Europe, 1 of GDP). It is difficult to exactly measure the impact, which will depend on the modes of application and the countries. Christian Broda, Barclays Capital, said that the plans already known in twelve countries and those who come early next year (that of the President Obama, including) should boost GDP by 1 in 2009 and 2 in 2010.
Oil may be even more powerful. The price of the barrel, for months, resisting the fall of the economies, it reached its record of $ 150 last may, then the crisis lasted ten months. But a failover has occurred this summer and prices collapsed. The barrel is back to $ 50: a division by three! All the huge transfer of wealth from consumer countries to current producers countries three years took the opposite path. The reversal is observed on the set of raw materials: their price index has lost 15 in October. For households in China as of France, this decline is a blessing. First because gasoline is cheaper at the pump (30 cents in France, or 20), then because the inflation rise 4 in developed countries transplanted brutally nose, which represents a substantial increase in purchasing power. In the United States, the net wage income of households won 2.4 in October.
This decline has another nice consequence: it allows central banks no longer fear inflation and lowering their rates. The conversion of monetary policy to the fight for growth has occurred in the United States and China, she comes to slow francfortois rate in Europe.
The force of impact of oil and other raw materials on world growth was observed during a previous crisis: in 1997 in Asia. At the time, economists are very alarmed because they fear a judgment of the exports to emerging countries stuck in a currency crisis which, from this, could generalize in a global recession. It is the opposite happened. Crude fell, inflation is restricted and the world has entered a phase of expansion unprecedented, until 2007.
There is no guarantee that this will happen in the same way this time. The current crisis is much more serious, systemic and global. The stimulus and the decline in prices should normally lead households to replenished purchasing power to consume. But they can also save money. That is the question which is at the heart of the uncertainty on the "when" of the recovery. If households are the stores to repay their loans, the reminders and the oil will not effect. Worse: If the decline in prices becomes deflation (there are however unlikely for the time), while households would be encouraged to block all their big purchases (real estate, automotive) and the recession aggravating.
The other effect of oil at $ 50 is to question investment in exploration and other energies. Clearly, the offer being deficit, as soon as the recovery will come, prices will rebound to 150 or even 200 dollars. The risk is very real that the resumption, as soon as born, is stabbed. In short, the world is a bit complicated. Be indulgent with economists.