Posted on 12/03/2008 8:34:08 AM PST by jazusamo
The National Bureau of Economic Research, the official caller of recessions, recently said we are now in a recession that started one year ago, in December 2007.
"The committee determined that a peak in economic activity occurred in the U.S. economy in December 2007. The peak marks the end of the expansion that began in November 2001 and the beginning of a recession. The expansion lasted 73 months; the previous expansion of the 1990s lasted 120 months."
This struck me as odd. Not that I don't believe we are in a recession now, but the starting date of December 2007 just seemed too early to me. To see if this made sense, I looked at some underlying economic data and the NBER's explanation, such as it is. Why this might be important, I'll explain later.
The rule of thumb for defining a recession is two consecutive quarters of negative real growth in GDP. This is now the second recession called by the NBER in the two terms of President George W. Bush, yet in neither case were there two such consecutive quarters. In fact, at no time in Bush's Presidency were there two such quarters.
Of all 11 NBER-called recessions since 1947, only one other involved no two consecutive quarters of negative real growth. That was the recession of April 1960 to February 1961. However, that recession involved one quarter with significant negative growth, -5.1% annualized, and a cumulative -1.0% growth for a whole year
Compare that to Bush's two "recessions." In 2001
No two consecutive quarters of negative growth.
Worst single quarter: -1.4% annualized.
Year-to-year: +0.2% (positive real growth, 4Q2000 to 4Q2001).
In 2007
No two consecutive quarters of negative growth.
Last four quarters: -0.2%, +0.9%, +2.8%, -0.5%.
Year-to-year: +0.7% (positive real growth, 3Q2007 to 3Q2008).
(Excerpt) Read more at americanthinker.com ...
Seven “Fat” years. It’s almost as if this has HAPPENED before!
NBER is NOT the official caller of recessions.
NBER is a private group.
Excerpt from another piece:
A panel of economists of the NBER that is responsible for dating the business cycles in the US has noted that the nation entered into recession in December last year after 73 months of economic expansion since November 2001.
The committee's word is regarded as final on the question if America has entered recession.
The National Bureau of Economic Research is publishing
PURE PROPAGANDA ! THE SAME OLD BLAME BUSH B****IT !
I couldn’t agree more and I believe Randall Hoven did an outstanding job pointing that out.
Recession propaganda? So are you claiming we’re in a period of economic growth?
What's happened before can happen again --the last recession had ended before its beginning was announced.
The Mar. 01 beginning of the last recession was announced in November of 2001. About a year later while pundits were referring to "Bush's recession" as the longest ever, the NBER people put out an announcement saying the recovery began had actually begun way back in the beginning of November 2001.
Having something come from the private sector is good, but whether they're public or private the bad thing here is that NBER won't tell us how they decide what's expansion and what's recession. Somehow we're just supposed to accept their bias without question --even when they show obvious political connections (NBER Committee announces Bush recession as member joins Obama team).
I just knew there was a political connection.
And you’ve provided proof!
My problem with NBER’s definition of a recession is that prior to December 2007, the United States was at full employment. Just because the United States deviated from an optimum condition, doesn’t mean that it entered a ‘recession’.
NBER is a private group that has an opinion. Fine. We all have opinions.
Just who decided that their opinion is the official opinion? (Answer: the AP bestowed this title upon NBER, who of couse is in no position to make anything ‘official’)
Sure, we all can name things that are bad with the economy, but the only consistent factor with NBER is that recessions can only begin with Republicans and end with Democrats.
I agree with the skepticism. It was a BS call.
we had a soft Q4, then rebounded in the first half of 2008, and until July it was possible/likely we would escape a full-bore recession. NBER is wrong to say that peak economic activity was in December, it was actually in the Spring.
But the oil price spike did enough crimping of the economy to weaken banks and housing and ... the rest is history.
The real recession starting in July, when oil peaked.
He’s right. If the recession started in Dec 2007, then by the same measure, the recession in 2001 started in Q4 2000.
“What were these simple rules?
* A recession starts in a given quarter when that quarter-to-next-quarter’s growth is negative and the total growth over the two quarters combined is also negative. (A somewhat weaker version of the “two quarters” rule.)
* A recession ends as many quarters after that beginning quarter as there remains cumulative negative growth.
That is, without trying really hard, using real GDP data easily available from the St. Louis Fed only, and programming simple rules in a spreadsheet, I was able to match 9 of the 11 NBER-called recessions, with no false alarms and with, at most, one quarter mis-match in timing. The only two exceptions in any of this? The two recessions under George W. Bush.”
MORE PROOF IT WAS A BAD CALL HERE:
http://www.bea.gov/newsreleases/national/pi/2008/txt/pi1008.txt
Table 4 shows the change in personal income and the trend is clear. It was up in all months except July.
They claimed that personal income was a factor, but personal income ROSE EACH QUARTER UP TO Q3 2008!
It’s patently clear that the tradition recession definition fails for H1 2008. It is a also clear that employment has never been used, but production and activity. Further, the claim was made in a subjective way, exactly the wrong way to make such a call.
I think what we have here is an attempt to paint the last year as worse than it is so that 2009 can be painted brighter ... for obvious political reasons.
Christina Romer was on the board until she resigned to join the obama team, and her husband David Romer is on the board.
Agreed, and I think Hoven did a good job explaining it in simple terms that the average person can understand. I know little about economics but he, like Thomas Sowell does a fine job explaining economics.
--and the reason for that is he actually understands what he's saying.
My experience has been that anyone, anyone --a doctor, lawyer, or economist-- that can't say what he means using words of one syllable hasn't a clue what he's talking about.
Well said, you’re so right.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.