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Posted on Mar 10, 2008 - 12:14am by John P. in Finance, News, Politics
Folks, I’m going to go ahead and call it, even though no one else seems to be willing to do so. We’re officially in a recession.
The National Bureau of Economic Research defines a recession as:
A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.
Let’s take a look at some of the leading indicators, shall we?
The first step to recovery is recognizing that you’ve got a problem.
What are we supposed to do about it? I don’t know.
I couldn’t agree with you more!
Yeah, the credit crunch is beginning to have its effect here too. One of our second tier banks got itself into trouble and has just been nationalised and bankruptcy is running at 100,000 people per year. Scary stuff.
Well if we are in a recession we may be out of it before we know it.
GDP continues to grow, at last official report (Feb. 28, for last quarter of 07).
As noted in your links above, personal income also continues to grow.
Unemployment rate has been falling since December.
Industrial production has been increasing since November.
Retail and food service sales for the period of November 07 thru Jan 08 were UP 4.4% over previous year.
Hmm… that’s five out of six of the criteria in the definition you cite tending NOT to support the idea that we are in a recession.
But wait, wholesale sales have blipped down! The sky IS falling!
Feh.
Yojimbo,
Care to cite your sources? I’d be interested in seeing where you’re getting your numbers.
John
The GDP growth he referenced can be found here from the US Bureau of Economic Analysis. Additionally, data on personal income also shows growth. If you are so inclined, poke around on their site as they have pretty graphs if that is your thing. :)
I think it is important for this discussion to differentiate indicators of us being in a recession vs. leading indicators that can point to a recession. Leading indicators over the past 50 years have correctly identified all of the recessions but have also at least half a dozen times pointed to a recession that never occurred.
I am not an economist so I tend to listen to what economist say and this is from Gail Fosler, Chief Economist of the Conference Board (the organization that is responsible for defining the values of the leading indicators), who states that a recession is unlikely but not impossible.
It is also interesting to look at the Misery Index you link to above in historical terms.
How I love unsubstantiated declarations! Let me count the ways.
Is it “official” official?
I knew it was coming but some folks keep throwing the “official” term around to show we’re not.
Either way.. I’m stuffing money in the mattress until things settle down a lil =P
I’m trying not to think about it. I have wonderful properties in coastal NC that I have discounted heavily and still not getting offers. I believe we could recover somewhat if the talking heads on TV would stop painting doom and gloom to everyone.
I have to agree with Steve S, it isn’t hard to talk ourselves into a bad position.
I am an Insolvency Practitioner in my day job and have to say that after a relatively quiet 2007, we are really beginning to see a lot of corporate failures. March has been manic.
The two biggest factors are inflation driven dollar decline, no one seems to pay attention (until this month), and the greedy bank hatched plot, sub prime mortgage mess. My opinion. And I love the rationalized denials.
[...] to send out a big “I told you so” to all the haters who didn’t believe it when I called in the recession on March 10. First of all, we have this major housing market problem. Everyone in the US has seen their home [...]
[...] I told you guys we were in a recession back in March, but now I fear we could move from a recession straight into a depression. Things could get really bad… Let’s examine shall we? [...]