HUZZAH!!! Recession declared! (and backdated!)

With the horses so long out of the barn that they are now baseballs and glue, officials have decided to nail the barn door shut and call it a recession. “The U.S. economy entered a recession in December 2007, a committee of economists at the private National Bureau of Economic Research said Monday.” The official declaration comes a mere EIGHT MONTHS after even most economists were saying this was the case. Of course it is also a mere EIGHT MONTHS after the Anderson Forecast from UCLA predicted we would avoid a recession.

“We don’t see that happening,” said Edward Leamer, director and co-author of the forecast released Tuesday [March 10]. “This is a tough call, but I will be very surprised if this thing actually precipitates into recession.”

Waiter, I’d like some of what he’s smoking…

What has me worried is all the official assurances that it will never turn into a depression.

5 thoughts on “HUZZAH!!! Recession declared! (and backdated!)

  1. Technically, a recession is two consecutive quarters of negative growth, so you can’t actually declare it a recession until at least six months have passed since it started. So economists eight months ago might have been predicting a recession, but nobody could declare it such until the data was in for those two quarters, something that can take a quarter or more to happen.

  2. Technically, a recession is an opinion. It is an arbitrary (but not capricious) measure of how much the economic situation sucks.

    Currently the generally accepted measure is two consecutive quarters. Prior to the Great Depression — which is starting to look like World Depression I — recessions didn’t exist as a concept.

    The problem with this definition is it relies on a series of statistics that have been revised and altered for political expediency. Just as a lot of economic stats are. For example, the definition of who is unemployed. Or the creation of Fannie Mae & Freddie Mac — which were invented so the government wouldn’t have to show that debt on its own books. Now, as we all know, this was a piece of bookkeeping legerdemain.

    The technical definition is nonsense and only confirms what is already known. I knew it was a recession six months ago and so did you, probably. Even according to the official report, the recession started a year ago. So why wasn’t it declared official in June? Because the official numbers didn’t say so. Now they do.

    However, the facts now and then remain the same.

  3. Pingback: Cut the bull and call it a Depression

  4. Yes, but when you go down the path of “a recession is what I say it is when I say it is” then, Alice, saying it is a recession has no meaning at all. You might well say we’re having a pastel Christmas with expectations of a mauve New Year.

    And, frankly, six months ago, the economic clues pointed to big inflation with oil prices going up and problems with mortgages. But we have had those in the past (okay, Savings & Loans, not mortgages) without it automatically being a recession.

    Of course, this is why I am an engineer and not an economist.

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