Current Recession worse than thought, '01 Recession milder than expected

From the WSJ online:

The current recession turns out to be worse than previously thought, while the 2001 recession was milder than earlier reported.

Those were two conclusions from wide-ranging data revisions released Friday by the Commerce Department's Bureau of Economic Analysis.

Data for the 2001 recession had shown that the nation's gross domestic product declined 0.2% from the fourth quarter of 2000 to the third quarter of 2001. On Friday, the government said GDP actually grew 0.1% during the recession.

The current downturn is much different. Revisions show that from the fourth quarter of 2007 to the first quarter of 2009, inflation-adjusted GDP dropped at a 2.8% annual rate, compared with the 1.8% drop reported previously. The decline continued in this year's second quarter, producing the worst recession since World War II.

The government initially reports the nation's GDP a month after a quarter's end. That makes the figure a rough estimate. It updates the estimates in the following months, and conducts comprehensive revisions every five years as new data arrive.

Many economists consider a recession to be two straight quarters of declining GDP, but that didn't happen in 2001. Economic activity bounced around in the first nine months of 2001, with a 1.3% decline in the first quarter, a 2.6% rebound in the second quarter and then a 1.1% decline again in the third quarter.

The nation's semi-official recession arbiter, the National Bureau of Economic Research, says the 2001 recession started that March and ended in November, making it among the shortest since World War II. The NBER relied on other economic data -- particularly nonfarm payrolls, which showed a steep decline -- to make that recession call.

I'm looking at this:

Four bad bears by Dshort.com

While the '01 recession was shallower, the accompanying bear market exceeded most bear markets as one of the worst of all time. Only the bear market accompanying the depression was worse. So this begs the question, with the current recession undoubtedly the worse since the Great Depression, will the bear market end earlier or later compared to the '01 recession?

I'll just note though, that the bull market did run up to incredible heights during the '98-'00 bull market compared to the bull market of the last few years. Nevertheless, we still have incredible excesses such as housing, debt, and no savings. Recovery will be muted as savings are being rebuilt. We do have more pump priming going on simultaneously in the world than at any other period in history.

The 1973 oil crisis recession was a lot worse than the '01 recession but the accompanying bear market lasted a much shorter time. Rhetorical question time: Shouldn't the bear market be worse since the accompanying recession was also worse? It should be just by thinking about it. Looking at the chart, apparently that statement doesn't hold. Note that the preceding bull market wasn't huge like the '01 recession. This may be a reason.

When taking a look at the previous bull market to the Great Depression recession, we see a similar run up compared to the '01 recession. The preceding bull market lasted some 8 years and ran up close to 500%.

Generally, based on the bad bear markets chart, it appears that previous bull market excesses have an effect on how long the next recession will be and not necessarily the amount of contraction that takes place during the recession. Take this statement with a bit of salt as we all know markets like to kill theories or past schools of thought. And with this recession, it certainly may not be true.