“They said it’s official. We’re in a recession.”
I have heard this statement, or variations of it, repeated dozens of times in the news and from individuals since the National Bureau of Economic Research declared that the United States has been in a recession since December of 2007.
The question remains, who are they?
According to their website, the National Bureau of Economic Research ” is a private, nonprofit, nonpartisan research organization dedicated to promoting a greater understanding of how the economy works.” In other words, it is a gathering of individuals and organizations that study the economy because they like it.
I grant that the NBER, which has been studying the economy since 1920, knows a lot about said economy and probably knows better than I do whether or not we are in a recession. Yet, I wonder at their authority to declare that the United States is currently in a recession, especially given that their evidence does not fit the long accepted definition of two consequtive quarters of negative GDP growth.
I bring all of this up because one of the hallmarks of economic downturns of any kind is hysteria on the part of people invested in the economy. We have seen this hysteria for several months on Wall Street and Capitol Hill as trillions of dollars in investments have tanked and hundreds of billions of dollars in borrowed money have been promised. I believe that the NBER’s unilateral announcement of recession will serve only to add to this hysteria and the severity of whatever economic downturn we may find ourselves in the midst of.
I do not doubt that the economy is weak right now. Living in a rust belt state and in a city some of whose biggest employers are of the automotive industry, I am seeing this economic weakness first hand. I also do not doubt that the traditional definition will likely show that the United States entered a recession during the third quarter of 2008 and that it will end by the third quarter of 2009.
How can I say that? Simply because that is how I read the economic data as a rank amateur, and right now, I think my guess is as good as anyone’s might be. Besides, if you repeat my claim, you can always tell everyone that “someone” told you that.