Recession of 2009/Addendum

Recent economic developments

2008 4th quarter

World

G20 leaders agree on need for fiscal stimulus [1]

The oil price falls. (December Brent North Sea crude $45/barrel, down fron July $147 peak)[2].

The United States

US economy in recession' - since December 2007 according to the National Bureau of Economic Research [3].

US consumer confidence falls to its lowest point since first measured in 1967[4].

US output falls - by 0.3% between second and third quarters of 2008 [5]

US interest rate reduced Federal Reserve Bank's benchmark rate cut to betweee 0 and 1/4% [6].

US national debt reaches 72.5% of GDP

Dollar interbank rate fall - 3-month LIBOR falls from 2.8% (September) to 1.58% (Dec 17)[7].

US unemployment rate the highest for 14 years - 6.7% in November 2008[8].

US consumer prices record falls - by 1% in October [9]and 1.7% in November [10]

US congress fails to agree on fiscal stimulus [11][12] [13]

US Federal Reserve Bank's $800 billion support package [14]

US Federal Reserve Bank buys mortgage-backed securities - Bank promises to buy up to $500 billion worth of mortgage-backed securities guarantee by Fannie Mae and Freddie Mac and up to $100billion worth of their direct debt [15].

US Federal Reserve Bank's quantitative easing - Open market purchases raise base money (the Bank's balance sheet total) from $0.9 trillion to $2.2 trillion [16]

US national debt reaches 72.5% 0f GDP[17]

Eurozone

European Fiscal Stimulus EC Commission plans 1.5% GDP fiscal stimulus [18].

Eurozone interest rate cut - by the European Central Bank by 1.5 p points to 2.5% [19].

Euro interbank rate cut - 3-month LIBOR falls from 4.4% (25 Sept) to 3.14% (Dec 17) [20]

The United Kingdom

UK output falls - by 0.5% between second and third quarters of 2008 [21].

Discount rate cut by an unprecedented 2.5 p pt to 2 per cent.

Interbank rate falls - from 6.3% (Sept 30) to 3.01% (Dec 17) [22].

UK Budget stimulus - discretionary public expenditure of 1.1% of GDP [23][24]

Opposition party opposes fiscal stimulus - David Cameron's speech of 8 December [25]

Investment banks cut lending - by over two-thirds between September and October [26]

UK national debt reaches 43.6% of GDP [27]

Other European countries

Crises in Iceland, Hungary and Ukraine - to be tackled by loans from the International Monetary Fund

Sweden cuts interest rates - by 1.75 pt to 2.0% [28].

Asia

Recession in Japan - as output falls by 0.9% and 0.1% in 2nd and 3rd quarters of 2008.

First quarter of 2009

The United States

$1.2 trillion 2009 budget deficit - forecast by the Congressional Budget Office [29].

President-elect Obama proposes major fiscal stimulus - in his speech of 8 January [30].

(Government spending expected to rise to 23% of GDP [31])

Eurozone

United Kingdom

Discount rate cut - from 2% to 1.5% [32].

Forecasts and outturns

Annual percentage growth in Gross Domestic Product

(forecasts are shown in italics)

Date	Source	Country	2007	2008	2009	2010	2011
02 October 2008	International Monetary Fund [33].	United States	2.0	1.6	0.1
		United Kingdom	3.0	1.0	-0.1
		France	2.2	0.8	0.2
		Japan	2.1	0.7	0.5
		China	12	10	9
		World	5.0	3.9	3.0
08 October 2008	Conference Board [34]	United States	2.0	1.7	0.0
06 November 2008	International Monetary Fund [35].	United States	2.0	1.4	-0.7
		Europe	2.6	1.2	-0.5
		Japan	2.1	0.5	-0.2
		China	12	9.7	8.5
		World	5.0	3.7	2.2
08 November 2008	Economist poll [36]	United States	2.0	1.4	-0.1
		United Kingdom	3.0	0.9	-1.0
		France	2.2	0.9	0.0
		Japan	2.1	0.5	-0.1
13 November 2008	OECD [37]	United States	2.0	1.4	-0.9	1.6
		Japan	2.1	0.5	-0.1	0.6
		Europe	2.6	1.1	-0.5	1.2
22 December 2008	World Bank [38]	United States	2.0	1.4	-0.5	2.0
		Japan	2.1	0.5	-0.1	1.5
		Euro area	2.6	1.1	-0.6	1.6
		China	12	9.4	7.5	8.5
		Developing	6.1	5.0	2.9	4.7
		World	3.7	2.5	0.9	3.0