❗Help close the gap: We still need to raise $40,000 by the end of March. Donate now
My Two Cents

How bad a recession?

Chris Farrell Sep 27, 2008

As I am writing this at work on Saturday afternoon, Washington is still negotiating the details of the $700 billion bailout. It does look like a deal will be struck before the stock market open on Monday–at least that’s the goal.

Assuming the negotiators strike a deal, I think the dicsussion will turn pretty quickly to how bad will the recession get. For instance, I was looking at some numbers calculated by Mark Zandi, chief economist at Moody’s Economy.com. For instance, pre-financial panic he figured the unemployment rate would peak at 6.5% inb the third quarter of 2009. Post-financial panic he now expects the unemployment rate to reach its peak at 7% in the first quarter of 2010. Similarly, he has hiked the peak-to-trough decline in payroll employment from 800,000 in a pre-financial panic world to 1,250,000 post-financial panic. The change in his peak to-trough decline in home prices is from a guestimate of a 26% drop to a 30% decline.

Bottom line: The financial crisis will hit Main Street hard.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.