Recession Dating
| Mon Dec. 1, 2008 10:13 AM PST
RECESSION DATING....Me, back in February:
When NBER eventually gets around to dating the 2008 recession, when will they decide it started? My money is on December 2007. And when will they date the end? I'd guess March 2009.
The nation's economy peaked, and the recession began, in December 2007, the National Bureau of Economic Research announced today.
....The committee concluded that the start of the recession was December 2007 — due in large part, it said in a statement, to the decline in jobs that began that month. But it noted that many other data points confirm the diagnosis.
"The committee determined that the decline in economic activity in 2008 met the standard for a recession," the group said in its statement. "Evidence other than the ambiguous movements of the quarterly product-side measure of domestic production confirmed that conclusion. Many of these indicators, including monthly data on the largest component of GDP, consumption, have declined sharply in recent months."
Advantage: blogosphere!
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Comments
When my daughter was 7 she asked why the weatherman was always wrong. After considering the variables I thought she could understand, she looked at me and said, "why doesn't he just open the door and look?"
Anybody who just looked could have seen the recession.
Submitted by Howard (not verified) on Mon Dec. 1, 2008 10:44 AM PST.
Does that mean that all your readers have to eat a chocolate hat cake now?
Submitted by Martin (not verified) on Mon Dec. 1, 2008 10:47 AM PST.
Echoing do and Frank -- can I assume you're not sticking to March 2009? Among other things it would mean that we've already seen the worst of the recession, which seems unlikely.
If a recession is defined as commencing when there are two back-to-back quarters of economic contraction, when does a recession officially end?
My guess would be when there is two back-to-back quarters of economic growth. Is that the "official" answer?
Senor Bush is blaming it on Clinton:
As he leaves office, Bush said he felt responsible for the economic downturn because it's occurring on his watch, but he added: "I think when the history of this period is written, people will realize a lot of the decisions that were made on Wall Street took place over a decade or so" before he became president.
If a recession is defined as commencing when there are two back-to-back quarters of economic contraction, when does a recession officially end?
Chicounsel: I don't believe the NBER sticks to this particular definition, but rather uses a broader collection of measurements. The statement Kevin excerpts basically says this. And there's also no such thing (really) as an "official" beginning or end to recessions -- different groups use different methods. My own definition is when I have to reduce the number of cable TV stations I subscribe to.
I'll guess August of 2009 for the end of this recession, with unemployment continuing to rise until the December of 2009, peaking just shy of 10%.
chicounsel, the unofficial definition of a recession is two negative quarters of gdp, but that's not the nber definition: otherwise, it couldn't date things like "december, 2007" as opposed to "q4, 2007."
i don't have time to check their website now, but i recall looking in the past and they do discuss how they date the start and end of a recession, and no, the end isn't two quarters of growth, either....
Submitted by Rick B (not verified) on Mon Dec. 1, 2008 1:07 PM PST.
I just checked my blog. On 12/26/2007 I wrote one entitled "A deep consumer-driven recession is just starting - expect at least two years."
That's my "I told you so." At the moment everything I see is trending down, and there are no indications of any bottom in sight. Consumption is dropping, and the resulting layoffs are feeding back into the reduction of consumption, as are the tighter credit standards. This is a consumption driven downturn, so consumption spending is the primary marker. The trouble is that it has to be consumption that will predictably continue into the future so that retail businesses can plan for it and convince their banks to lend them money for hiring and merchandise.
For the last few years, homebuilding and home supply has amounted to about 40% of GDP, and with banks sitting on their money and not lending even to good credit-worthy customers, there is no likelihood that the economy will begin to turn around or even find the bottom in the next six months or so.
Stimulus will be required, and that is probably not politically doable until after Obama takes office. Anything done before then will be too little and too unpredictable to cause the businesses to react in a expansive manner. The implementation details of how to conduct the stimulus will run into a fog of conservative ideology. Congressional conservatives will fight against effective methods of implementing the stimulus and the administration will simply drag its feet, partly out of ideological disagreement and partly because they are leaving soon anyway. I could be wrong on this, but I don't expect it. There are too many conservatives still in Congress and no election coming up to focus their minds.
I could continue with the bleak statements, but let's just say that my "at least two years" stated in December 2007 is beginning to look optimistic.
I will say that I don't expect to recognize when the economy is hitting bottom until well after it does. But nothing right now even hints that it might be soon, "soon" meaning most optimistically the next six to nine months.
Submitted by Rick B (not verified) on Mon Dec. 1, 2008 1:50 PM PST.
Intrade - the prediction market - has had a contract called "The US Economy will go into Recession during 2008" which I have followed since September, when it was about 30 something to buy.
Today it is "Last Price: 96.0 ". I wonder who the clueless 4% are?
I do know of one. One guy posting as SBVR complained at one of my postings discussing the Recession and left a set of cherry-picked statistics from the St. Louis Federal Reserve that he claimed showed there was no recession. I checked his blog today. He has read the NY Times story today and now disagrees with the NBER. He is providing links to a whole series of statistics that he says prove there is no recession at present.
There really are conservative dead-enders out there living in fantasyland.
Submitted by Neil B (not verified) on Mon Dec. 1, 2008 6:29 PM PST.
Congrats, Kev! Contrast with a econonut like Larry Kudlow who ridicule the idea of recession on the way ("pessimistas".)
Submitted by Robert Waldmann (not verified) on Tue Dec. 2, 2008 4:21 AM PST.
Well you nailed the start date and I really really really wish that your end date were correct. However, I don't have any hope at all that, when they date the trough, you will be vindicated again. I do hope and trust that neither of us will be a senior citizen.
Submitted by Robert Waldmann (not verified) on Tue Dec. 2, 2008 4:24 AM PST.
Oh and by the way, I don't hold with recession dating. In all my years, I have never dated a recession, although my girlfriends* have become depressed from time to time.
* I note that the plural indicates "2 or more" and leave it to the reader to guess whether I have dated more than 2 women.
I was intrigued by this topic and put together a survey to get a pulse on how consumer spending will be impacted by the recession. Please take a moment to fill this out.
http://www.surveymonkey.com/s.aspx?sm=VhPx0EHajFlNJFPJ7c_2fcUA_3d_3d
Recession
Submitted by Anonymous (not verified) on Tue Feb. 17, 2009 10:20 AM PST.
These are difficult times we are in right now and the scary part is we are not sure who we can trust right now. Financial advisers are getting busted left and right for being dirty. Next it could be mine or it could be yours. The smartest thing for any of us to do right now is educate ourselves as much as we can. Good article, I enjoyed reading it. Im attaching another article that I found very useful. Hope this helps.
http://www.gotoguy.com/2009/02/17/clear-and-predictable-part-3/
Recession
Submitted by Patrick K. (not verified) on Wed May. 6, 2009 10:25 PM PDT.
During recessions, many macroeconomic indicators vary in a similar way. Everyone knows that recession is a general slowdown in economic activity in such a country over a sustained period of time, or a business cycle contraction. On the other hand, recession depressingly affects not only the country but also the people itself. It makes paying people’s bills a little more anxious, thus, some don’t know if they’re going to be able to continue paying them. All wants to get rid of their debt as fast as they can. During periods of recession, more and more people get payday loans as their fast solution to lessen their debts. Short-term credit is a need that pops-up. Those who don't want to use their cards often turn to fast payday loans in a recession.
Since Mojo has this useless
Submitted by jewelry stores (not verified) on Sat Aug. 15, 2009 2:04 AM PDT.
Since Mojo has this useless feature of 'recommending' comments, how about we 'recommend' the stupidest posts?
