Default likely would be accompanied by severe economic contraction Argentina s GDP fell 15 after it defaulted in 2002.

Second, in 2001, weak capital spending in the corporate sector (accounting for 10 of GDP) underpinned the contraction.

The Central Bank of the Netherlands expects Dutch GDP to shrink by 0.5 this year following a contraction of about 1 in 2012.

Moreover, the extremely sharp contraction in first quarter GDP may indicate that the disaster s negative impact on the economy was more significant than expected.

On paper, at least, this sizeable threat involving blunt fiscal contraction amounting to some 4 of GDP should have properly aligned incentives in Washington, DC.

But the collapse of GDP has necessarily implied a rising debt ratio, driving the country into a recessionary spiral as economic contraction forces further spending cuts.

In Ukraine, too, a huge boom in 2004 2007 was followed by a contraction amounting to almost 15 GDP in 2009 a direct result of domestic policies.

China s Inscrutable Contraction

The Second Great Contraction

Fiscal contraction is contractionary, period.

The Great Contraction of 2008 2009

To be sure, demand contraction was inevitable in these countries, given that they were living far beyond their means no economy can permanently sustain a rate of demand growth exceeding that of GDP.

According to computations by the economist Paul van den Noord, the net result of the 1937 budget was a fiscal contraction amounting to three percentage points of GDP certainly not a trivial amount.

This contraction has become even more severe since then.

This threatens to aggravate the damaging contraction of global trade.

As my colleague Erik Hurst and his co authors have shown, states that had the largest rise in construction as a share of GDP in 2000 2006 tended to have the greatest contraction in that industry in 2006 2009.

The ensuing losses will aggravate the financial turmoil and economic contraction.

But Keynesianism involved continued fiscal expansion, with no offsetting monetary contraction.

Consider the US. Though annual GDP growth is estimated to have rebounded to 4 in the second quarter of 2014, following the 2.1 first quarter contraction, that still leaves average growth in the first half of the year at a measly 1 .

After many years of contraction, investment in construction also will rise slightly.

But, in a Great Contraction, problem number one is too much debt.

The period of gravitational contraction lasts about 10 to 15 million years.

Then We draw it in towards Ourselves , a contraction by easy stages .

Forecasters assumed that monetary expansion would provide an effective antidote to fiscal contraction.

Following the German economy s sharp contraction in the last quarter of 2012, the question for the country today is whether it can avoid a technical recession (defined as two consecutive quarters of economic contraction).

Even though the British government s credit is still solid gold, Prime Minister David Cameron s administration is about to embark on what may be the largest sustained fiscal contraction ever a plan to shrink the government budget deficit by 9 of GDP over the next four years.

The latest estimates for Italy and Spain project a deeper contraction, prolonged into next year.

And emerging markets will suffer once the US contraction and global slowdown undermines commodity prices.

The maximum rate of economic contraction a veritable freefall came in the last quarter of 2008.

In 2004, for example, Chad s 39.4 annual growth rate contrasted sharply with Zimbabwe s 6.8 economic contraction.

A more accurate, if less reassuring, term for the ongoing crisis is the Second Great Contraction.

In contrast, QE3 will be associated with a fiscal contraction, possibly even a large fiscal cliff.

This contraction of the job market has had a greater impact on youth than on adults.

All of this, according to Reinhart and Rogoff, involves a protracted and pronounced contraction in economic activity.

Nevertheless, the legacy of the huge contraction in credit is not likely to go away anytime soon.

At the same time, it spares an already weak economy damaging fiscal contraction in the short run.

There is a real possibility that global growth will register its first contraction since World War II.

Even if a bailout plan were implemented quickly which appears increasingly unlikely there would be some credit contraction.

Growth in high end services employment is matched by contraction in high employment components of manufacturing supply chains.

GDP Fetishism

Okay, so it causes a small involuntary contraction in my hand by putting a magnetic pulse in my brain.

With a return to output growth, the recession defined as two consecutive quarters of economic contraction is officially over.

But what we have seen since 2007 is an overshooting of the contraction in consumer demand and domestic investment.

A sharp contraction in jobs and labor income has many negative consequences on both the economy and financial markets.

The most common is the theory of explosive thermal contraction of particles under rapid cooling from contact with water.