More people are coming around to the idea that the recovery will not be a typical V-shaped recovery like the recessions of the 50’s-80’s.  Instead we’re looking at the U-shaped recessions of 1991 and 2000-01.  Worse yet, it may be L-shaped like the Japanese recovery from the banking crisis of 1990.  Even if we bottom-out later in 2009, the recovery will be slow.

Roger Altman, former deputy Treasury secretary, writes in the Financial Times: Why this will not be a normal cyclical recovery (ht Jonathan)

The rare nature of this recession precludes a cyclically normal US recovery. Instead, we are consigned to a slow, painful climb-out …

What is unusual is that this is a balance-sheet driven recession, centred on the damaged financial condition of both households and banks.

via Calculated Risk.

What he’s saying (and I agree) is that consumers (households) are too far in debt to begin spending soon.  In addition, their assets which are overwhelmingly their house, 401k, and IRA’s have all lost significant value. Savings must increase to achieve a sense of personal security.  That means consumption must stay low or drop.  No increase in consumption means a slow recovery.