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For months now the dreaded "R" word has been floating around, and while most analysts are quick to point out that the technical definition of a recession has not been reached at this point, the signs are definitely pointing to a looming recession on the horizon. Now, there are a large selection of economists who are stating that the economy has already slid into a recession.According to a poll by the Wall Street Journal, 70% of 51 economists who were polled over the past week are now reporting that the economy has moved into a recession.
Before we move ahead, let's take a look at the technical definition of a recession:
In macroeconomics, a recession is a decline in a country's gross domestic product (GDP), or negative real economic growth, for two or more successive quarters of a year
So it should be simple ... based on the technical definition the economy is still not in a recession. This is due to the fact that for the 4th quarter 2007, the economy grew at 0.6%. Despite this fact, billionaire Warren Buffett came out earlier this month and stated that based on what he has seen through his retail businesses, the economy has basically already entered into a recession.
If Buffet came to this decision based on what he was seeing through his company's retail sector, then his view point was probably only re-enforced yesterday after the Commerce Department stated that retail sales fell by 0.6% during the month of February.
OK, so I know what you are thinking ... we are definitely not in a recession ... the numbers just don't work out. Well, that may not be exactly the case. According to Stephen Stanley of RBS Greenwich Capital, it is all up to the National Bureau of Economic Research to decide. He points to the 2001 recession, where there was only one negative GDP quarter, and believes there is a good chance that we could have a recession this year that does not have any negative GDP quarters.
So the question will continue to be asked ... are we in a recession or not? For some people out there, there is no way that they will ever side with the recession crowd unless we do in fact see back-to-back quarters with negative GDP growth, but others of you are probably already under the impression that a recession has in fact started.
So I pose the question to you, recession or not?
If Buffet came to this decision based on what he was seeing through his company's retail sector, then his view point was probably only re-enforced yesterday after the Commerce Department stated that retail sales fell by 0.6% during the month of February.
UNEMPLOYMENT:
The economists polled by the Wall Street Journal were also asked to predict where they saw unemployment heading this year. Currently unemployment is sitting at a decent 4.8%, but the forecast is now looking at the percentage to rise to 5.5% before the end of 2008.
OK, so I know what you are thinking ... we are definitely not in a recession ... the numbers just don't work out. Well, that may not be exactly the case. According to Stephen Stanley of RBS Greenwich Capital, it is all up to the National Bureau of Economic Research to decide. He points to the 2001 recession, where there was only one negative GDP quarter, and believes there is a good chance that we could have a recession this year that does not have any negative GDP quarters.
So the question will continue to be asked ... are we in a recession or not? For some people out there, there is no way that they will ever side with the recession crowd unless we do in fact see back-to-back quarters with negative GDP growth, but others of you are probably already under the impression that a recession has in fact started.
So I pose the question to you, recession or not?
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Reader Comments (Page 1 of 1)
3-14-2008 @ 1:51PM
doug said...
My industry, trucking, specifically household goods has been in a recession for over 2 quaters
3-14-2008 @ 8:36PM
B. Green said...
Is everyone in a fog? We have been in a recession for a year. Jr. is in Texas smoking weed while his friends and family, in the oil business are destroying the economy of this country. The media should be held accountable too. They are either stupid or biased to report the truth. I believe the politicans should take an IQ test before they are able to run for office, then only one term. That way they can't get into anyone's pocket to deep.
B. Green
3-14-2008 @ 3:11PM
Jeff said...
We have to be in a recession when the dollar is worth 40cents and my pay doesnt come close to keeping up with inflation. When we dont go out to eat the restaurants will close. If we cant pay our bills will they cut our power off. If we cant pay our taxes will they come and arrest us at our homes. They better not come to my house unless they plan to help. Many of us have decided that we may have to fight rather than surrender.
3-15-2008 @ 11:03PM
ZorkBrauk said...
I found some helpful recession survival tips from UFO aliens at
http://itstherecessionstupid.com
my favorite is their personal budget tips:
http://putinforpresident.typepad.com/itstherecessionstupid/2008/03/ufo-recessio-17.html
3-23-2008 @ 1:31PM
Mickey Rytman said...
Well let me give everyone a thought. I blame the Real Estate market on most of todays money problems. I think we need a cap on their profits on sales. I call it the Rytman Theory. First let me express why I feel this way. If someone buys a property, they pay somewhere around 5% commision. Next the mortgage company gets a percent and so on. Just think if someone buys the property the property goes up 5%+. If that property is sold say within six months guess what? The property goes up 5% + 5% which = 10%. There is a 10% incress in the property, this causes the property sold to go up 10% in value and you take that a add all the sales around the world guess what? Every property is going up just because of sales. I feel if a cap was put on the Real Estate companies this would help world wide to slow the problems we face today. Think about what effect this is having world wide. If we just do something about this one problem, we would solve a lot of the money problems we have today and the banks would not be loaning money out, just so someone could make 5% etc... We need law makers to look at this one problem and see if might help. What does everyone think?
Mickey Rytman