by Silicon Valley Blogger on 2009-01-06 29

Curious about why our savings account rates have been slumping? Ever wonder how our current economic cycle ranks among other business cycles? Economic graphs and charts reveal some trends.

Analyzing The Current Economic Cycle

I enjoy looking at historical financial charts ; it gives me a chance to digest the big picture. Now that were formally living in a recession for some time now, do you wonder how this economic recession stacks up against all others? Ive been curious about how this whole thing will unfold, especially since my money wants to know if itll still be around in a years time!

A while back, I wrote a post on recessions and the state of the economy. discussing the predictors and signs of economic recession. and how the recession and the stock market are linked, among its topics. I found it to be fascinating study.

This time, I stumbled on some awesome graphs by an analyst of International Economics, Paul Swartz. It gives us a look at how the current economic downturn compares to previous recessions. Although these charts dont claim to be completely predictive, my brain cant help but try to project the future from what we see here. What I found most interesting is this one glaring point that differentiates the 2008 recession from everything else: its cause.

Ours is a red-headed stepchild of a recession.

While past economic down cycles are typically caused by monetary tightening, the one we have now was triggered by imbalances in our financial system due to credit system woes and a swinging pendulum of overextensions then overcorrections in the markets. The hiccups in our financial system now are due to overreactions in the markets and financial institutions, consequences of the massive hangover that follows unchecked booms. Things were unregulated for sometime, with financiers, investors, money lenders even consumers, showing great disrespect towards investment risk .

I liken it to what happens in nature: think super volcano, or mega earthquake. Were bound to feel tremors and aftershocks for a long time.

Business Cycles Portrayed In Cool Charts

Heres a subset of those charts (or graphs) I came across. The blue line on each chart represents the track for the average of all post WW II recessions. The red line tracks the 2008 recession. The recessions begin at 0 with the gray section corresponding to the recessionary period that lines up with our current year, 2009.

US Real GDP Growth