A recession as abrupt and deep as the current one usually leads a similarly quick recovery for a “V” shaped bottom to the business cycle. But the decision to fight the recession with a massive expansion of government will edge the business cycle in a “U” shape with a longer bottom and a more gradual recovery. There is a rising risk that the business cycle may end up shaped like an “L” or a “W” if the recession continues to be used as the rationale for expanding government. An “L” would mean a very long time at the bottom. A “W” would mean and initial recovery then a relapse into recession again. What happens depends on the course of inflation over the coming year?

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