True Lies
Back in March, Beldar branded as liars anyone (economists included) who dared suggest the nation was in a recession. Instapundit was less nasty but equally flip, asking “Dude, Where’s My Recession?” too many times to count.Ed Morrissey was more polite, but equally certain that “Whatever else this economy might be, it’s not a recession, and it’s improving.” DRJ was a bit more cautious than most, conceding that “the economy is weak and a recession cannot be ruled out” while concluding generally that the economy probably was not in a recession and “it looks like Beldar was right.” I argued at the time that Beldar may or may not have been right on the underlying issue of whether we were in a recession, but he was wrong to drop L-bombs on anyone who disagrees.
Well, it turns out that the doomsayers were not only not liars, they were right all around. Per the National Bureau of Economic Research, we’ve been in a recession all year, we just didn’t know it until now (as we almost never do at the time). Remember the next time you “know” the other guy is wrong about something that isn’t actually going to be knowable for several months to come.
December 2nd, 2008 at 12:41 pm
It’s a tautology. They decide how long we have been in a recession by deciding that the trigger happened this quarter, but then you backtrack all the way back to the last time employment expanded.
And the really stupid thing is that they can come back next quarter and say that the recession is already over as of now, by their own standards.
The only way this works is in an Orwell dystopia run by economists.
Phelps´s last blog post..NOW he likes the Constitution
December 2nd, 2008 at 4:50 pm
When I took economics a recession was defined as two consecutive quarters of negative economic growth. The economy grew in the first two quarters of 2008. So the only way we could have been in recession is to redefine recession as two or more consecutive quarters of economic growth before two or more consecutive quarters of negative economic growth.
With that definition, we were in a recession through much of the Bush administration. Which is what these economists wish you to believe.
Of course, we would also have been in a recession in the last years of the Clinton administration, except for the fact that this new definition of recession only counts during Republican (er — Rethuglican) Presidential administrations.
Call it yet another variant of the Greater Fool Theory.
December 3rd, 2008 at 2:50 am
These same guys didn’t call a recession in 2000 until December, even though the first and third quarters had negative GDP. WOnder why they took so long?
December 4th, 2008 at 2:09 pm
Which means what they were saying, before the fourth quarter of 2008 ended, was not yet true.
And by the way, has the fourth quarter of 2008 already ended? Did I miss Christmas and New Year’s?
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December 4th, 2008 at 3:17 pm
The “it ain’t a recession unless GDP recedes for six months straight, and then only if those six months happen to line up with calendar quarters” meme is beyond silly. That said, the current quarter has been dismal enough to make it a pretty safe bet that we’ll end up with negative growth when it’s done.
December 4th, 2008 at 5:34 pm
It’s not a meme, Xrlq, it’s a criterion economists have been using for decades.
When people say things like, “If it’s not a recession, it sure feels like one,” that’s a meme.
December 5th, 2008 at 7:12 am
It’s a meme. Working definitions come and go. NBER’s 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,” but the only lasting definition is we’re in a recession if NBER says we are. Check out this list of recessions, focusing on their durations. Yes, they’re all at least 6 months long. No, they don’t all start or end with calendar quarters, and most of their lengths in months aren’t even divisible by 3. I don’t all the GDP numbers handy, but I’d be really, really surprised if the July 1981 to November 1982 recession consisted of six consecutive quarters of negative growth, as it would have to in order to fit the meme-definition of recession (as supposed to, say, two separate mini-recessions if there were one positive quarter in the middle).
December 7th, 2008 at 11:29 pm
We would still be in the same recession if the GDP in the third quarter did not rise above the losses in the first two quarters, and was then followed by more quarters of losses. If the quarters following the third increased, then the third quarter would mark the beginning of the recovery.
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