Although sharp downturns are usually followed by sharp recoveries, the latest economic slump likely faces a weak bounce back, says BCA Research.

In a research note, BCA observes that historically, “there has been a close correlation between the severity of downturns and the vigor of subsequent recoveries, arguing that a V-shaped expansion in the U.S. may be in order.”

For example, it points out, the economy grew at an average 7.7% annualized pace over the six quarters that followed the deep 1981-82 recession. “Optimists also note that the slope of the yield curve historically has been a good indicator of the economic cycle. Thus, the current steep yield curve in the major economies would be another reason to expect a vigorous economic expansion,” it says.

However, BCA maintains that “the lingering after-effect of the financial bust will remain a serious headwind to growth in much of the developed world for the next few years.”

“Indeed, recoveries that follow financial recessions tend to be much weaker than what follows non-financial recessions,” it says, adding that “significant damage was done to the financial infrastructure in the past year, consistent with a weaker-than-normal economic expansion.”

“While the global economic recession has ended, growth in the major developed regions will be slower than would normally occur after such a deep recession,” it concludes. “This should limit consumer price pressures and keep policy conditions constructive for risk assets.”