I find that the harder I work, the more luck I seem to have. - Thomas Jefferson

No More Denying It

by Hal_10000

Well, it’s official:

The National Bureau of Economic Research said Monday that the U.S. has been in a recession since December 2007, making official what most Americans have already believed about the state of the economy .

The NBER is a private group of leading economists charged with dating the start and end of economic downturns. It typically takes a long time after the start of a recession to declare its start because of the need to look at final readings of various economic measures.

The NBER said that the deterioration in the labor market throughout 2008 was one key reason why it decided to state that the recession began last year.

Employers have trimmed payrolls by 1.2 million jobs in the first 10 months of this year. On Friday, economists are predicting the government will report a loss of another 325,000 jobs for November.

The NBER also looks at real personal income, industrial production as well as wholesale and retail sales. All those measures reached a peak between November 2007 and June 2008, the NBER said.

In addition, the NBER also considers the gross domestic product, which is the reading most typically associated with a recession in the general public.

Many people erroneously believe that a recession is defined by two consecutive quarters of economic activity declining. That has yet to take place during this recession.

Predictably, the market got spooked and shed 680 points.

They’re not sure how long this recession is going to last.  They’re predicted it should reach bottom next quarter, which would bring us close to the post-Carter and mid-Nixon recessions as the longest since the Depression.  But until our GDP contracts by 1/3 and a quarter of us are out of work, I’m not prepared to accepted the New Depression moniker.  I think the ‘81-’82 comparison is apt.  That was caused by a massive hangover from a decade-long inflationary binge.  It took a while for us to recover.  This recession is being fueled by a ridiculous housing market.  It will take us a while to recover.  Sane fiscal policy out of Washington will be the first big step.

One point.  Just as it took a year to clarify that we are in a recession, it may take a year for us to realize that we’re out of one. Remember that the 1990’s recession ended almost two years before Bill Clinton took office but we didn’t “notice” it until after the election. I can’t explain why but I feel like things are starting to loosen up.  We just got offered a mortgage at a ridiculously low rate.  The stock market, for its plunge today, has been level for the last couple of months.  Home prices actually rose slightly here in Texas.  This could be a dead cat bounce.  Or it could indicate that we’re leveling off.

If I’m living in cardboard box next year, I guess I’ll know for sure.

Comments

Posted by syddelish on 12/01/08 at 10:47 PM from

If I’m living in cardboard box next year, I guess I’ll know for sure.

Well at least you’ll have a schnazzy theme song straight from the 80s.

Posted by mikeguas on 12/02/08 at 06:25 AM from

In other news, weather experts declared it rained yesterday. How can these guys submit these statements with a straight face? Everyone else already knew there was a problem and that we were in a recession. I know they have to tally up the data and all, but go out on a limb, and just state the obvious sometimes even before you have the data. Hell, all of us knew the party was over months ago.

Posted by mikeguas on 12/02/08 at 06:27 AM from

.... Well, everyone except some of the perennial stock pumpers on CNBC, who will deny the existance of this overdue statement.

Posted by on 12/02/08 at 01:48 PM from

I laugh at your recession!  This summer my boss did something stupid and had to resign and in the space of 2 months my income tripled as I rose from grad assistant, to emergency interim computer manager to the real deal.  I’ve been enjoying this new position for 4 months now, though I’m about to tighten up my wallet, pay off my credit card (3 or 4 months depending on my tax return) and start saving for a new car and a down payment on an eventual house.  Good luck to everyone else though :)

Posted by Miguelito on 12/02/08 at 06:03 PM from

davidst..

It’s really like every recessions/downturn: Those that didn’t live like idiots (outside their means) racking up tons of debt.. will likely be fine.  A little belt-tightening for a bit, then things will rebound eventually.

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