December 1, 2008

"Breaking News: The U.S. entered a recession in December 2007."

Hot -- yet year-old -- news.

45 comments:

Chris said...

Sweet. Won't be long before we're back on track.

Triangle Man said...

I agree with Chris. If this thing is a year old already, it can't be long before we'll see the light at the end of the tunnel. Right?

Hoosier Daddy said...

Looks like they need to get the new definition of recession in those econ text books.

Original George said...

Ocean freight traffic (the Dry Baltic index) tells the story...

The recent months' collapse in dry bulk shipping rates has been unprecedented in its severity.

Experts say the shipping slump will last another two years, possibly five. Situation? Bleak.

Chris said...

Wouldn't bulk shipping (I'm making this up as I go along) be a lagging indicator for a big importer like the USA and a leading one for a big exporter like China? Is there any relationship between the BDI (I just made that up as well) and international attitudes about free trade?

garage mahal said...

Well, this is about the time Obama's campaign started in earnest. So it would make sense.

Chris said...

This does give the laissez faire folk a bit of ammo.

The Drill SGT said...

somebody changed the definition of a recession on me?

I always was taught it was: 2 successive quarters of negative GDP growth.

who'd a thunk it was an employment number instead?

and what is this offical private group of economists anyway?

Joe said...

Of course the definition has changed, and it will change again January 21, 2009.

Simon said...

So, to sum up: We "entered" a fictitious recession in December 2007, and will "emerge" from it - at least by the telling of the media - at 12:01 pm on January 20th, even though by that point we will almost certainly be in an actual recession (i.e. two consecutive quarters of contraction) for the first time since the media started saying we were.

Of course, I could be wrong. Perhaps the media will decide it's more useful for Pobama to have a "recession" or other "crisis" to justify the "emergency measures" to be taken in "response."

ricpic said...

If Chinee no poo chessnuts out fiah Uncre Sam haf burn tettacoos faw rong rong time.

Jack said...

See the advertisement placed in today's Chicago Tribune calling into question the legitimacy of an Obama presidency.

Jack said...

I must agree with many of the other posters here today: Economics is a massive liberal scam designed to make us feel bad about ourselves and undermine the self-esteem of Republicans. We are all victims. Can I get a round of "boo hoo hoo, the economists want us to believe we are in a recession and we aren't"?

Heck, if those fancy-pants economists had known B. Hussein was going to be elected, they probably would have never invented this recession in the first place!

Oh, and libtards: please don't deny what we all know is true.

garage mahal said...

Conspiracy theories everywhere!

L. E. Lee said...

The above post by "Jack": with a link to an ad "calling into question the legitimacy of an Obama presidency." demonstrates that the right has it fair share of crack pots.

Original George said...

Jack--

I dunno. Bernanke just announced further rate cuts. Any lower and we'll be in negative numbers, and banks will be paying us to take their money.

So, from now on, the Fed is pushing the proverbial wet noodle. That's what happened in Japan. Banks don't want to lend. People don't want more debt, and people who want it can't get it because their scores are too low.

Why shop now when you know the sales will only get better? Therefore, factories continue to slow down and lay off people, and fewer people have money to buy, and the sales get even better. Seems like that's where we're going.

It's the end of the giant enormous colossal post-WWII victory expansion. One of my grandmothers saved slivers of soap; the other darned socks. My mother-in-law made most of her children's clothes, and I'm baking bread....great recipe: 3 3/34 cups flour, 2 tsp salt, 12 oz water, packet of yeast. Knead the glop until it elasticizes. Do not add flour. Let rise for one hour. Punch down, and let rise again. Yum. Who needs sliced bread? What a marketing scam that is!

Jack said...
This comment has been removed by the author.
Joe said...

Incidentally, a problem with the article is that it states "It's Official", yet this is simply a private group with unknown (officially at least) motivations who openly state that they don't follow no stinking rules in their determination.

An important factor in looking at long term economics is consistency. While this group's criteria may be valid, they need to reexamine the last several decades to put it in perspective. (Major point being that news outlets are now pronouncing this a long recession, even though the standard used is different from the last recession.)

Simon said...

L.E. Lee, while some of the aspects of the Berg case were a little crackpot, Obama could have squelched it and all subsequent litigation on the issue by complying with Berg's discovery request. Instead, his legal team sought to dismiss the case on standing grounds. While I agree that Berg lacked standing, Obama's decision to fight on that beach practically guaranteed that the issue would come back around to bite him as soon as he takes office and starts creating plaintiffs whose standing can't so readily be dismissed. Ditto the Clinton case: no one has standing before she's commissioned (if she's confirmed; one would hope, but doubts, that there are still forty Senators who take their oath of office seriously), but as soon as she's in office and starts undertaking ministerial and discretionary functions, the result will be potential plaintiffs. Of course, the difference is that Obama can fix his problem (he was, after all, born in the United States), whereas Clinton cannot.

BJM said...

Fire up the ole Wayback Machine to the 1992 elections; same tune, same MSM, same manipulative BS.

You do remember Clinton & Gore's "Everything that should be up is down and everything that down should be up" campaign shtick in spite of GDP growth, doncha Bunky?

Apparently not.

As Bobby once said "Who do I have to pay to keep from going through this twice?"

save_the_rustbelt said...

Michigan has been in a recession for 6 years. Welcome to the club.

This has to potential to be much worse than we are used to. Much worse.

Shanna said...

Can I get a round of "boo hoo hoo, the economists want us to believe we are in a recession and we aren't"?

How bout, economists went and changed the definition of a freaking recession and it’s very annoying! Two quarters, negative growth. All this other stuff feels squirrely to me. I like clear metrics.

mcg said...

Here's how Ace of Spades explains it.

First we have to hit the recession threshold (famously defined as two consecutive quarters of negative growth, although that's not a hard and fast rule; one quarter of .1% growth, followed by a quarter of deeper contraction, would presumably suffice. Once a recession is "declared," then they search back for the last peak before it to date it.

dbp said...

The common definition of a recession has long been two consecutive quarters of GDP shrinkage.

Maybe if you have a fancy name like "National Bureau of Economic Research" then that gives you the right to make up a new definition. Goodness knows they achieve a couple of things with this: They justify the existence of the NBER, since it doesn't take a 'bureau' to count-up 2 quarters of negative growth. And, they get to declare recessions when there aren't ones.

Chris said...

Is there any economist here who can explain the purpose of the standard definition of recession? Do market agents actually alter their behavior based on such definitions? It seems pretty clear that the Fed and the US Treasury don't seem to think you need any kind of clear definition in order to take "emergency measures." From what I've read, Japan has been a mess for ages yet just ended its longest expansion post WW2.

BJK said...

The NBER was founded in 1920.

Setting starting dates for economic events is a big part of what they do; the site explains a lot of their reasoning, including the deviation from the 'two consecutive quarters' definition that so many of us have come to understand.

http://wwwdev.nber.org/cycles/dec2008.html

For the record, the CBER also shows that the U.S. Economy had pulled out of its recession in 1991, an event that President Clinton likes to take his share of credit for despite it happening before he got into office.

Pogo said...

I mentioned this at Althouse a few weeks back, now Instapundit asks "Will higher ed be the next bubble to burst, with student loans providing the easy credit that inflated it?"


This isn't the beginning of the end of the downturn, but the end of the beginning, and it is going to really really suck.

Chris said...

Well, vis student loans, you can't walk on them (even in bankruptcy with some exceptions). That doesn't mean people won't default, but it probably means that the such defaults will be got by honestly (as opposed to sup-prime).

Original George said...

Today's vocabulary term is "liquidity trap."

And this from Biz Week...

Over 7.5 million mortgages or 18% of all properties with a mortgage were in a negative equity position as of the end of September 2008. There are an additional 2.1 million mortgages that are approaching negative equity. These are defined as mortgages within 5% of being in a negative equity position. Negative-equity and near-negative equity mortgages combined account for over 23% of all properties with a mortgage.•

The distribution of negative equity is heavily skewed to a small number of states. Nevada and Michigan have the highest percentages of negative equity - Nevada led the nation with an estimated 48% and Michigan was second with 39%. Five other states have negative equity shares in excess of 20%: Florida (29%), Arizona (29%), California (27%), Georgia (23%), and Ohio (22%).

Darcy said...

What an unfortunate coinkydink that I own property in Michigan and Florida. :(

Michael_H said...

A recession since December 2007? Really?

Maybe according to National Bureau of Economic Making Shit Up, but not in the classic economic definition. Yet.

Pretty soon there will be great joy in announcing that the recession has "officially" ended. Which may be true, as we are likely to move into a depression, which does end a recession.

Jon said...

BJK said: "For the record, the CBER also shows that the U.S. Economy had pulled out of its recession in 1991, an event that President Clinton likes to take his share of credit for despite it happening before he got into office."

The standard two negative quarters definition shows the same thing.

Chris said...

t Michael H.

Does an officially defined recession have any meaning for people who aren't trying to build data sets to study business cycle theory? Is there a reason to have a classical definition beyond that?

veni vidi vici said...

"This has the potential to be much worse than what we're used to" is one of those meaningless expressions since, after all, every downturn *has the potential* to be worse than what came before.

On topic, I've been expecting the media revisionism to begin any day now. Here we are, right on schedule!

At least by the look of many of his appointments (save for Rubin, the most overrated charlatan of our time), Obama is demonstrating that he's anything but a dummy. "Trust, but verify" is always a useful guide to dealing with our national leaders, and in the spirit of comity that will presage a national comedy, Obama deserves no less.

Joe said...

This has t[he] potential to be much better than we are used to. Much better.

Michael_H said...

"Is there a reason to have a classical definition beyond that?"

Yes.

John Thacker said...

Actually, that's a misreading. The NBER says that December 2007 was the peak, the last non-recessionary month. It says that we entered a recession in January 2008.

road warrior said...

Are you serious? We are in a recession? Now way!

Actually i have been reading about this. So many people are looking to Obama as the hero of all this. I hope the liberal illuminati are right and Obama will fix all the problems but i have my doubts. I am not sure what will fix this new found recession.

Mberenis said...

The recession isn't always a bad thing! Most people don't realize how much money there is out there. During economic times like this, there is more money to be had than ever. Because of the bailouts and economy, lenders are bending over backwards to bail you out too. Believe it or not, there is people getting tons of cheap money nowdays to start businesses, buy homes, pay off debt, and more. Profit from Recession

rhhardin said...

Excellence in Motivation Lays Off 34 Employees

Dayton Daily News, via the WSJ

ballyfager said...

For those of you trying to turn this into a political thread, not everything is about politics.

And if you think this country is not in a very bad spot financially and economically, then either you haven't been paying attention or you're not too bright.

hdhouse said...

what? no posts that this is Obama's fault? Or Clinton's?

The right wing is slacking off it seems.

Michael_H said...

hdhouse said: "what? no posts that this is Obama's fault? Or Clinton's?

The right wing is slacking off it seems."

The right wing isn't slacking off. We've been meeting in our secret clubhouse. We think it's time to blaze a new trail in blaming left wingers for the economic downturn.

Sure, it's always fun to blame things on Carter/Clinton/Obama, but that becomes dull after a time. So we needed a new name on which to hang the blame. It may be a bit premature to roll this new marketing plan out, but here goes:

Recession '09: It's Barney
Frank's fault! I blame Barney! It's the Frank Economic Fallout, the only cure for which is the Big Barney Bank Bailout.

Barney Bailout '09. The refreshingly effervescent recession.

Michael said...

MORE BREAKING NEWS!!!!!!!!!!!!

Bush: "I Was Unprepared For War," I'm Sorry" For The Economic Crisis..."

Duh-B-Yeah...sure...

Original George said...

Did the popping of a housing bubble in colonial America in the 1760s cause the Revolution?

“The expence of living is greatly advanc’d in my absence,” [Franklin] commented. “Rent of old houses, and value of lands ... are trebled in the past six years."

Our rulers--Lords Frank, Dodd, Rangel, Reid, Bush, Paulson, and Bernanke, and her lady Pelosi--leave much to be desired.