Rough winter, but no recession
Posted on April 30th, 2008 – 2:19 PMBy Kara McGuire
Us media folks have really been singing the blues for the past three months, reporting grim economic indicator after depressing consumer confidence survey as evidence that the debt-funded party is O-V-E-R and we’re staring at some tough financial times.
For a while I resisted believing that the economy is in the tank. My informal economic polls of friends, co-workers–really anyone who would take it– indicated that for the most part people were fine personally, although admittedly a little scared by all the depression recession mumbo jumbo.
But despite my informal poll results, I eventually succumbed to recession fever after reading gloomy story after gloomy story and reporting out a fair number that failed to come to a definitive conclusion about the health of our pocketbooks.
Perhaps not knowing is even more terrifying than knowing just how bad things are. It’s the feeling that there’s a monster under the bed, but he hasn’t reached his hand out to grab us–yet.
Now there’s proof that there’s been no recession so far. Our economy grew slightly in the first quarter, like it did in the last quarter. Pretty darn slow, but still in positive territory.
In other news, the Federal Reserve’s committee also lowered interest rates by a quarter point today, to 2 percent. The committee’s statement was peppered with words like “uncertainty” “subdued” “weak” and “softening.” They were careful to avoid the “r” word. You know, recession. But clearly the troops are on alert.
What do you think? Do you think the country avoided the “r” word in the first quarter but we’re in the midst this quarter? Does it even matter if we’re officially in a recession or not if we’re hunkering down as if we are?
4 Responses to "Rough winter, but no recession"
So the country is not in a ‘recession’ yet. However, I would contend many families already are. Even though I snagged a 5% increase, it is already being eaten up by a corresponding rise in health care and grocery costs. My GFP (gross familial product) is definitely down this year.
My only hope is to find a higher paying job, but with this job market, it will be incredibly difficult to do…
In many ways recessions are like real estate in that they’re local and usually very local as a downturn in the economy or in real estate really only matters if it impacts you (or your family) directly.
If you measure GDP in per capita terms, then GDP per capita fell in the first quarter. This is because the population growth rate in America is roughly 1 percent annually. Any annual real GDP growth rate below the rate of growth in population represents a decline in per capita GDP. So the better definition of a recession would be any rate of GDP growth below 1 percent (or whatever the actual rate of population growth was during that period).
Yes, there was a mild recession in Q1.
That may be all we really see in terms of negative GDP growth.
But the job market has just now (like early May) beginning to be affected by this. The job market is on the far back end of all economic activity. It is the very last part of the economy to be affected, lagging the financial markets by at least 9 months. During the last recession which officially occured in 2000, continuing ue claims did peak until 2002. This time, we will need to wait until Q2 Q3 of 2008 to see how it affects jobs.
Kara asks
“Does it even matter if we’re officially in a recession or not if we’re hunkering down as if we are?”
Nope. Technical definitions are largely irrelevant to Average Jane & Joe.
When does the wage data come out? Middle class wages have been flat for years; with inflation ramping up, essentially stagnant growth to GDP & limited wage growth, it seems likely it’ll take a while to get this economy back on track.
Chris Farrell blogged a bit last week about the jobs numbers possibly indicating this will be a shallow & short slowdown. I’m not convinced & think we’re perhaps not yet on the uptick. Foreclosures are still common, real estate hasn’t recovered & credit markets are still tight. I expect the economy to plod along through year’s end, at least.
