Martin Feldstein says in part:
Because monthly data for December will not be available until next year, we cannot be sure whether the economy has turned down. The measure of personal income for October suggests that the economy may have peaked and begun to decline, but the data for employment and industrial production in November and for sales in October show continued growth.
My judgment is that when we look back at December with the data released in 2008 we will conclude that the economy is not in recession now. There is no doubt, however, that the economy is slowing. There is a substantial risk of a recession in 2008. Whether that occurs will depend on a variety of forces, including monetary policy and a possible fiscal stimulus.
I thought that this was cut and dried: “x” number of months of negative growth = recession.
What reason would anyone have to pay for economic advice if there wasn’t a recession? The plain fact is that even the dip in 2000 wasn’t a recession, so we reallly haven’t had “bad times” since about 1990. And that one wasn’t very bad. And the crash of 1987 wasn’t very bad. So we are left going back to Jimmy Carter’s time for a real set of bad times. At that point, the economistas have to start redefining what a “problem” is, and if they don’t convince us, they don’t get paid for their airy columns.
I remember a television financial show of the 70’s called “Rough House” …. it was said Howard Rough had successfully predicted 7 out of the last 3 recessions.
But, it isn’t rosy out there for employment seekers … more of them now with fewer opportunities (I know because its part of my job). Unless you have indispensable skills (think skilled medical – RN, Rad Tech, etc.), finding a position is more difficult and unskilled positions are not coming open nearly as frequently as say 2004-2006. It is an employer’s market right now.
Tom, the data for the last two recessions is here:
http://www.nber.org/cycles.html/
and, yes, the “dip” in 2000-2001 was a recession.
Note also that the “good times” that you imply were present in the 1990’s were quite uneven in a number of ways:
http://www.wsws.org/articles/2001/nov2001/nber-n28_prn.shtml
There is a story I love to tell concerning economists.
A physicist, a chemist and an economist are all stranded on an island with a can of beans, but no can-opener.
The physicist says: I can open the can of beans. I will calculate the hight from which we need to drop this sharp rock and it will open the can.
The chemist says: I can do better than that. Let’s build a fire and I can calculate the point at which the can will burst and we will have hot beans!
The economist says: You are all making this too complicated. First, let’s assume we have a can-opener…..
YBIC,
Phil Snyder
James Grant gets it right.
#4 KH- The site you offered gives only expansion period data and the amorphous:
“The determination that the last contraction ended in November 2001 is the most recent decision of the Business Cycle Dating Committee of the National Bureau of Economic Research.”
However, a formal recession is not the same as a contraction, either semantically or practically. A recession is determined by two consecutive quarters of negative growth, or contraction. However the period of 2000-2001 did not see consecutive quarters of contraction, instead having several undulations which generally showed near zero or even contraction, depending on the period of time selected for review. The practical implications are large here: if a contraction doesn’t last for more than 3 months, then generally businesses are not forced to revamp their financial, manufacturing, or marketing strategies. Instead short term corrective actions are employed. A company laying off one quarter might rehire next quarter, for instance. During a recession, those workers tend to go elsewhere if they can as manufacturing lines are closed down, or offices are closed permanently.
Your cited article about contrary samples during a general expansion period are ‘normal’ for any statistical science. But your citation has some distinct foibles in it, for instance the comparison of the 90’s growth rate with that of the late 70’s. Such comparisions are invalid except on a numerical basis, which is not what those commenters were presenting in their remarks. In fact, those numbers don’t even hold water if you consider those expansions along with either the preceding or succeeding contractions. The contractions prior to or following the expansion in the 90’s were unusually mild, whereas the contractions based on the oil crisis of the mid 70’s or the Volker anti-inflationary monetary policies of the turn of the decade in 1979-82 were severe. How these economists could have forgotten the historical term “stagflation” depicting the economy of the 70’s is hard to imagine, but apparently they have. Why they would want to foretell doom and gloom during the 2000’s is beyond me: I suspect that there is a political agenda in this appraisal. But that might be as it will, one could just as easily note that they also seem to have forgotten the basic concept that productivity gains plus income gains equal total growth. If companies are racking up productivity gains nearly equal to total economic growth, incomes will not rise appreciably. They note both high productivity and low income growth phenomena, but in doing so they seem to ignore that you cannot improve one without depressing the other, unless total growth rates rise. This brings up the final point undermining the whole citation: for some reasons these particular savants don’t think a secular 3% growth rate is pretty good in a developed economy. Again harking back to stagflationary times, I can recall when their predecessors were opining that the US should not expect anything more than a 2% growth rate, and maybe less. So perhaps long term 3-4% growth with mild contractions once a decade isn’t such a bad thing?
Everyone I know is struggling financially. Most are making it by refinancing their mortgages. Now the prices of their homes are leveling or even dropping below purchase price and their equity disappearing. One can almost hear the bubble popping.
#4 KH- after butting heads with the NBEH site for some time, I found their excel sheet data export file. Apparently they use something called ‘adjusted GNP’, and I wasn’t able to efficiently figure out how they adjusted GNP to their figures. Their numbers are … different the official government statistics. In fact, most of their press releases seemed redolent of ‘smoke and mirrors’, but perhaps I was just put off by their website when nothing is really wrong in their analysis.
The source of my data is
http://www.bea.gov/national/index.htm#gdp
and in particular the “current dollar and ‘real GNP'” link.
If you down load the linked excel file and do the math on the inflation adjusted GNP data, you’ll see that the 2000’s have been somewhat suppressed from the prior norm of about 1% real growth per year. But asides from the slough concurrent with the 9/11 attack and its economic effects, the major phenomena that is notable with either quarter to quarter comparisons or longer term (two year averages) is that the economic statistics have become much more stable since 1990. My theory is that increased computerization of inventory management has strongly muted the classical ‘inventory recession’. Something, I would also note, that is ‘different’ between today and all prior economic experience.
Nice try Alice. Tell everyone you know to stop spending more than they make. It might just work.
Recessons are usually seen in the rear view mirror. Only when we have gotten through the dip, do we realize we were in it.
Remember, we are not in control of it all…He is.
bl