Everybody Panic! It's a Recession!!!

It's official, I guess.... kinda. The National Bureau of Economic Research says that we've been in a recession all year. Finally, someone backs up our alarmist news media. Now would you people finally panic so we can get some really juicy news bites!?

Did you panic when you heard this news? Wall Street did. Then again, the Dow plunges 100 point whenever someone on the trading floor rips a loud fart. No, don't be fooled by their name - there is nothing official about the NBER. No magic powers. Nope. Just a bunch of guys.

In fact, a recession, by definition, still cannot be declared.

Why I'm smarter than this group of award-winning economists after the jump.

Maybe they fell asleep during Econ 101, or maybe they think that they get to write their own definition for the word. They can call it a downturn. A slowdown. Markers for a possible recession. But a recession it is not.

A recession, as defined in economic terms, is:

a period of two quarters of negative GDP growth.
Ok, ok, maybe they know this. Maybe it's the application that is giving them issues. If you look at the numbers, and maybe they should, you'd see that economic growth has been slow. No one will dispute that, but we haven't yet had those two consecutive quarters of negative growth.

Q1 07: +0.1%
Q2 07: +4.8%
Q3 07: +4.8%
Q4 07: -0.2%

Q1 08: +0.9%
Q2 08: +2.8%
Q3 08: -0.3%
Q4 08: ?

No, actually, the problem is that the NBER chose to re-define the word to suit their liking.
"a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP growth, real personal income, employment (non-farm payrolls), industrial production, and wholesale-retail sales."
So I guess maybe they've been waiting for a real recession to happen and just grew impatient, choosing to apply their definition. Sorry guys, still no recession. Don't feel bad though, even the jokers in my link got it wrong.

Feel free to panic about something else.


Ashley @ Wide Open Wallet said...

Ha! glad you said it. You never hear on the news that we've had growth in the 7 of 5 quarters. Hmm... that story must not be interesting enough.

Anonymous said...

The current recession is not to be feared, rather respected as the messenger and forerunner, the warm-up for what is to come! The (GRD) great republican depression is about to change American driving attitudes and driving habits! Obama went to the Chinese for a loan, and they hesitated! Yankee Doodle, China has you by the Balls, and they like red meat! We are not the number one AAA borrower we once were! Reality is about to shove new transportation realities right up you tight little brown spot, and with swift deliverance and great pain! Once you get used to public buses and trains you won't mind the walk from the station to your destination as much, and you will lose weight, not from the extra walk so much as from the new "all veggie" diet GRD poverty will impose on you! The days of arrogant entitlement are over! Having a Euro-diesel for weekend pleasure cruises will be for the upper-middle class only, the rest of us will live in Shanty towns on the outskirts of cities full of foreclosed McMansions of a former time! The Oil barons pump less and charge more, and the less we use, the longer they last before the last drop is sold, so it is in their better interest to sell less at a higher price, diesel or otherwise, and they do take up the slack! The party is over boys, pick up your beer cans and go home, bye the way, you'll be charged for the damages in the morning! Good night America, it's over!

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