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The key to understanding the current market environment is understanding just how deep any economic contraction might be. A deep recession could mean a much more protracted market decline, however, a shallow recession will coincide with a rather shallow market decline.

Lakshman Achuthan recently talked to Fox Business to discuss his perspective. Achuthan says the current recession is likely to be shallow, but that there is a serious risk of a shock (a Lehman style event or a Greek event in the current market). Achuthan says the key is to focus on Europe and China to gauge how deep the contraction in these regions becomes.

As for the job’s market, Achuthan says the trend is likely to worsen, the unemployment rate will “spike” and the contraction will worsen. Achuthan says he wouldn’t be shocked if the unemployment rate jumps back into double digits.

Source: Fox Business

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