Is This Recession Different?

A good question asked yesterday: Is this recession different from others in degree or in kind?  No recession hits the historic averages smack in the middle, so this one would have to be at least a little different in degree of severity or duration.  But might it be fundamentally different from the types of recession we've seen in the past?

I had not seen the question posed so bluntly, but I think that people like Treasury Secretary Geithner believe this recession is different in kind.  Perhaps he and others haven't thought the question through in exactly this manner, but their behavior seems to reflect a conclusion on this question.

Think about where we have made our bubble mistakes:  during the tech boom, we watched stocks without earnings go through the roof, and we said, "This time it's different."  Then the stocks plummeted and we learned it wasn't really different.

Then housing prices boomed and we said, "This time it's different."   No it wasn't, because that boom was followed by a bust.

Now we are in a bust and we hear "This time it's different."  Those are the most dangerous four words in economics.  I don't think this recession is different.  Oh, it's different in magnitude and duration, it's different in the specific combination of factors that led to the recession, and its different in the level of panic that policy-makers have expressed.  But the fundamental process of recession and recovery?  I think it will prove to be pretty much like the rest.

So what's that process like?  For a simple table of statistics on past business cycles, check out the NBER.  For a narrative account, check out Businomics.  For the global experience with financial crises, check out Ken Rogoff and Carmen Reinhart's work here and here.