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.

Indeed, the rate of economic contraction in the fourth quarter of 2008 and the first quarter of 2009 reached near depression levels.

China s Inscrutable Contraction

The Great Contraction of 2008 2009

Not surprisingly, the contraction was most acute during the depths of the Great Crisis, when consumption plunged at a 4.5 rate in the third and fourth quarters of 2008.

The Second Great Contraction

Fiscal contraction is contractionary, period.

Investors are talking of green shoots of recovery and of positive second derivatives of economic activity (continuing economic contraction is the first, negative, derivative, but the slower rate suggests that the bottom is near).

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 the IMF, the economy will remain in recession next year, and, though the rate of contraction will be less severe than in 2012 ( 0.7 in 2013, compared to 2.3 this year), the unemployment rate is expected to rise further, from 10.6 to 11.1 .

This threatens to aggravate the damaging contraction of global trade.

New York Recent data suggest that the rate of contraction in the world economy may be slowing. But hopes that green shoots of recovery may be springing up have been dashed by plenty of yellow weeds.

In January 2009, the annualized growth rate in the second half of 2008 was officially estimated to have been 2.2 but current figures reveal the contraction to have been much sharper a horrendous 6.3 .

This contraction has become even more severe since then.

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

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

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).

Finally, those who view the Great Depression as fundamentally a product of tight fiscal policies and Treasury orthodoxy overlook the much greater culpability of a fixed exchange rate regime for the transmission of bad monetary policy, and thus for fueling the contraction.

Indeed, I expect that while the rate of US contraction will slow from 6 in the last two quarters, US growth will still be negative (around 1.5 to 2 ) in the second half of the year (compared to the bullish consensus of 2 ).

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

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

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

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

After the collapse of Lehman Brothers in September 2008, the global financial system nearly melted down and the world economy went into free fall. Indeed, the rate of economic contraction in the fourth quarter of 2008 and the first quarter of 2009 reached near depression levels.

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

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

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.

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

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

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

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.

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 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.

It misjudged the consequences of fiscal consolidation and credit constraints, underestimating the contraction of employment and overestimating exports and privatization receipts.

The contraction of property and stock markets will undoubtedly dampen US household borrowing and demand, potentially triggering a downward spiral.

So the contraction of external deficits is a sign that a correction is under way, and the rebalancing is impressive.

The first Great Contraction of course, was the Great Depression, as emphasized by Anna Schwarz and the late Milton Friedman.

This logic would be correct if the world were operating under a fixed exchange rate regime, with governments tying official exchange rates to another country s currency or the price of gold. Under these conditions, monetary contraction (or slowing expansion) would have a recessionary (or a less stimulative) impact on other economies.

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.