Job losses combined with a cyclical downturn in about two years, could give way to a depression “that takes our legs away,” Nightingale warned.
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Nightingale did say we are due for a global economic recovery but it is in jeopardy.
“Just because you get a cyclical recovery doesn’t mean … that the secular problem is going to wane," said Nightingale. He warned that unemployment rates would continue to rise dramatically over the next year.
Nightingale said that even during the Great Depression of the 1930s there was a cyclical recovery, but it was soon followed by a cyclical downturn.
In regards to the ZEW Index data (German analyst and investor sentiment) released Tuesday, Nightingale acknowledged that the numbers were better than expected, but said, “It still isn’t suggesting an improvement in conditions. It’s just suggesting that the deterioration is rather slower than it has been.”
He added, “We shouldn’t be too optimistic at the moment.”