Recession, recovery, or other: Word definitions and other confusing things

Forbes, as I've noted before, tends to report against the predominant ignorance of mainstream (middling educated) media, popular opinion and political convenience. The magazine's pieces tend to follow some sort of logic -- imagine that.

In early December 2008, it was announced that the U.S. had been in a recession for roughly a year, to the surprise of anyone who actually knows that a recession is. I mistakenly assumed that this meant the quarterly GDP reports for that period were to be officially adjusted. I was wrong. But did the mainstream media grab onto this? No, they didn't. However, Forbes actually looked at the numbers and filled in the holes that I found in the government's assertion.

Congratulations, It's A Recession - Forbes.com

They pointed out that a "popular yardstick for recession -- two successive quarters of GDP decline, has not yet been reached. The economy dipped (-.2% GDP) in the fourth quarter of 2007. But in the first quarter of 2008 it grew .9%, and in the second quarter, it grew 2.8%.

The economy tends to be well on the road to recovery before unemployment starts to fall. In 1990-91, it was 15 months after the bottom of the recession that unemployment peaked. After the bursting of the dot-com bubble in 2001, unemployment peaked 19 months later. That means the unemployment rate of 6.5% is likely to get worse for some months before it gets better.

Minding the maxim on investment prospectuses, past performance is not a guarantee of future results. The NBER puts it tersely: "The committee does not forecast." The amount of time until recovery depends largely on what happens to falling home prices and troubled credit markets.

But at least it's nice to be talking about "recovery" instead of tip-toeing around "recession."

Surprise! We've had a recession for a year already! Even though GDP has not been in the negative consistently, we have been in a recession. The definition is changed, it would appear. That's fine -- I would rather see economists err on the side of caution than -- it sounds pale just thinking it, seeing it is how we got here -- to approach things with too much (bloated) confidence.

What kills me is these folks who have been stammering around proclaiming we were in a recession, a deep recession, a depression, without even actually comprehending outside of the self-centered little universe they live in, what any of that actually is, will now think they are brilliant for having been proclaiming recession since they lost their CRA-mortgaged house when their unemployment ran out. Or something.

Those folks, though, will never learn. They don't want to learn, they just want to complain. That's what they do. Perhaps under Obama, they will hold their tongue for a while longer at least, since the great Prince of Darkness will no longer be (a) the president, (b) the vice-president, (c) the Treasury secretary, (d) host of the Tonight Show...

- jR

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