Who are they?

“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.

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7 Responses to Who are they?

  1. Keneil says:

    I would think that every recession would have a different make up because each time it is something different causing it.

  2. dlhitzeman says:

    The underlying causes are often different, but the result is the same.

    As an example, in the late 70s, the cause was the oil embargo and bad government policy with regard to controlling inflation. The result was a sustained contraction of the GDP that lasted for much of the early 80s.

    In the 00s, the cause was the housing bubble, bad investment practices, and a high debt loads from individuals to the government. The result will probably be a contraction of the GDP lasting from the third quarter 2008 until the second quarter 2009.

    In each case, the standard result remains the same, contraction of the GDP.

    What makes the current recession different from previous recessions is that the traditional indicators of economic weakness are not as significant as they were even in 1999 when our last recession started. Manufacturing, long a stalwart measure of American economic health, is not the force it once was, so while thousands have been laid off from that sector, those lay offs have been offset by gains in other sectors like technology and tech services.

    I am certain that the next economic slowdown, which I think will probably happen sometime in the 2015-2017 time frame barring a significant world event before then, will probably be the last one were manufacturing plays a significant role in the direction of the entire economy. For better or worse, our economy is going tech, and I think the current weirdness in the economy reflects that change.

  3. djhitz says:

    You are right, DL that high, technical, production and employment is the new wave to bolster our economy. America is highly ceceptable to high technical, nuances. However it is a delicate, flower of a concept, like our economic, situation. We stand to be ridiculed by public interest that if we employ, high technical skills to help save our economy. We’ll be accused of isolationism. Who cares? Do we care?
    We are talking about saving the money of the greatest nation in the world. Why should, we let public interest stand in our way?
    New, high tech production and labor, should be our economic, savior. Our new president and his cabinet should initiate it, somehow. But what present, decent, sucessful, manufacturers would be gung-ho to start this ball rolling? After all aren’t most high technical, companies laced with import products?
    We as a nation NEED to do this now before we spend $7,000,000,000,000 on our energy bill (See: T. Boone Pickens Energy Plan, PLEASE!!!!).

  4. dlhitzeman says:

    T. Boone Pickens is one of my heroes, not because I think his plan is better than anyone elses’, but because he presents a plan completely generated by the private, free market. I think we need a lot more Pickenses in the world in places like the energy and auto industries to make the next generation the American economy work.

    As an aside, this is an area where I think the government needs to stay out. Let American innovation and industry figure out the best path. We did that with Franklin, Edison, Ford, and Einstein, and they helped us get where we are. The government holds innovation back, so it should keep out.

  5. djhitz says:

    But what about teching our employment, population? People at DANA were making $23.00 an hour. They once employed, thousands in a now oversized, production, plant, gone giant, machine shop. Only the journeymen keep their jobs. Those who aren’t retained on unemployment… well, there aren’t enough gas station jobs to go around. Gas station jobs are getting, high-tech, too.
    Thanks to our economic, slowdown, I can buy an ex-DANA employee’s, boat an motorcycle for cheap so they can barely pay their $1200-1800 a month, house payments in a house that was reasonable to them when they were making $23.00 an hour at 40= hours a week.
    It’s not just DANA, either. It’s GE, Navistar, Essex, Rea Magnet Wire, US Steel, Steelcase, Whirlpool, Kraft, CSX, Burlington,etc., etc.
    They’re all victims of NAFTA and ungodly high, prices brought about by decadence and inflated egos. The wealthier are buying up six lots of DANA-like employees lake cottage lots and building these obnoxious, lake mansions on them. I find this poorly, unscrupulous.
    Come on DL, you’re one of US now, civilian. How are we going to work this? We’re the Edisons an Einsteins and Fords of our time (well not quite). We, the citizens of the United States, rich and poor alike need to share our rebuildment and like you say, the Obama administration needs to keep out of it as much as possible.
    At least right now other than a $385,000,000,000 per month Iraqi Freedom bill, I can see our tax dollars being fed back into our economy. Mortgage and auto maker bailouts aren’t good but we’re not dumping good money down the toilet. The toilet money is long gone and I’m sure plenty went into the sewer, still, today.

  6. dlhitzeman says:


    I think your comment focuses like a laser beam on exactly what I think the problems are with our current system of governance and economy:

    First, we want to invest tax money in the economy. If the economy needs that money, then it should not have been taken out as taxes to begin with. Instead of having the government take people’s money away and then deciding for itself how that money should be spent, the government should let the people keep that money and spend it themselves. Americans are really good at spending their own money, and when they are allowed to do so, the economy grows. Keep in mind that the past seven years of growth began with tax cuts in 2001.

    Second, we are the next generation of innovators; I agree. The problem is that so many of us cannot innovate because so much of what we earn is taken away and, essentially, wasted. The people who will develop the next generation of new, fuel efficient cars or advanced battery technology or alternative energy are not in DC or Detroit or Hollywood but in garages in places like our own home towns. The problem is that people like us don’t have the money and can’t get any. The big three are going to get $34 billion. If I’m lucky, I might get $600. The only solution to this problem is in my first point.

    Third, yes we spend and have spent a lot of money on Iraq. We spend a lot on Afghanistan and other places too. This money, however, is not being dumped into a big, sandy hole and burned. One of the reasons that the current economic situation is not worse is because the lion’s share of the money spent on Iraq goes to American companies paying American workers to produce everything from beans (MREs) to bullets (JDAMs). When Iraq ends, all of that money, the very kind of reinvestment in the economy you suggest, goes away. What happens then? I am not saying that we should continue operations in Iraq for some kind of twisted economic gain, but to point out the risk of relying to tax spending to stimulate the economy. Eventually it must end, and the consequences of that end can be even worse than economic bubbles bursting.

    Fourth, if the answer is somehow to invest in the economy with tax money, it should be done for proactive purposes. Investing $34 billion into three automakers that have demonstrated since the 80s that they cannot adapt to the changing marketplace and are constantly on the edge of failure is not proactive. Congress already extend the automakers $25 billion in taxpayer money for the development of alternative energy vehicles. As I understand things, they have borrowed only a small fraction of that money and have produced no results. Instead of investing this way, if we are going to do it, we should invest in companies that are producing results. We should invest in companies who harvesting methane from dumps and turning it into electricity. We should invest in companies who are figuring out ways to recycle previously un-recyclable plastics. We could, as has been suggested, invest in a technology “Apollo Program” that helps us make the jump from manufacturing to technology. Instead, we are going to give an already bankrupt industry $34 billion so that they can stay in business for a few more years until they fail anyway.

    They only way we fix these problems is if we, as voters and taxpayers, scream at the top of our lungs at every available opportunity that we will not take this anymore. We need to let our president and our Congress and our states know that we want them to listen. If they don’t, then we have to fire them and replace them with people who do listen. This is not an immediate solution, but it is the only one that will get things done.

  7. djhitz says:

    DL, you’ve done well to slightly, reinforce my hopeful theory about a $1,000,000 tax credit for all 150,000,000, full time employees in the US, who might have something to prove. I’m sure this won’t happen. Our government doesn’t seem to want to give us much, tax money back to the people, who generated the most, middle America tax dollars. I don’t think it’d be like wasting $150,000,000. I’m sure plenty would frivolously spend, too much. Some would bankrupt. My hopefulness, therein lies with the few, who could somehow be financed into inventing something to save mankind’s more temporary setbacks, feeding, housing, financing, energizing. You spoke of responsible, reinvestation of tax dollars. It’d be kind of like the parable of the ten talents. Inasmuch as the government wastes much money. This gamble, might turn into something.
    If I could burn, hydrogen ions in water, under the hood of my F-150 and was appointed to do so by Uncle Sugar. By God, I’d do it!
    You’re probably right about the big three getting autoed out by their stimulus. They still haven’t learned much from Honda. Even when it’s too late. It’s not wise to try to reteach the unteachable. Waste always seems to be our, best subject.
    As far as screaming at our leaders. I can’t do too much screaming at my superiors at work, without much risk of termination. If I am to scream at my city council, mayor, representatives, senators, governors and executives, I will do it responsibly, through the proper channels and I will do it with people, like you and your readers on common based, interests that promote, “life liberty and the pursuit of happiness”.
    I know that our Middle Eastern interests are “kosher”. Overthrowing and replacing Saddam’s, gangster government was about 12 years, overdue. Whatever comes out of this besides, body bags, folded flags and people with burned, heads and dismembered bodies, remains to be seen.
    In the meantime, they haven’t hit us at home for a long time. Yes, they got Mumbai recently but it would seem if hitting US, here has been difficult for them. Good!

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