They looked at previous quarters whether they were in an up-phase, down-phase, or treading-water phase of the business cycle.

It’s a long, long way from their conclusion to one that says we’re in a recession …. which they didn’t say, because the evidence wasn’t there. It still isn’t.

Willie, have yourself a good read ^

Sorry, the measurement that directly relates to economic growth (GDP) is more important than the measurement you like that doesn’t directly relate to economic growth (employment). I can’t believe I’m even having to make that point.

Even Dick Cheney said “jobs, in a fundamental sense, are the basic measure of how well the economy is serving people.”

The other point you attempt to make — that the change in oil prices was a big factor in the pretty decent 2Q08 GDP number isn’t supported by the facts. It’s not there, and you’re repeating it doesn’t make it so.

The link you shared does not provide any insight into the impact of oil prices on GDP calculations. Try this one.

Yes, high Oil prices contributed to the revised Q2 GDP data. No, this is not a “Goldilocks economy.” The bottom line is that if this is a legitimate 3+% GDP, it is one of the worst economies ever to generate that data point since the US began recording its economic history.

Q2 GDP Is Mostly Inflation
Q2 GDP: GROSS LEVERAGED LIE

In fact, the worry at the time was that the growth was inflationary.

Other than getting that formula backwards, you are right on. The inflation and a run-up in oil prices were misrepresented as growth.

Oil, schmoil. 2Q08 was pretty decent, and absent evidence NBER has not presented, sure as bleep wasn’t recessionary.

You can go your own way, Tom, but you are arguing against the facts, and against the NBER. As I said before, I am no economist, but even I can see that oil prices were a factor in the inflated GDP statistics. If you aren’t convinced, you can do the math yourself.

Peace.

DS

Sorry, the measurement that directly relates to economic growth (GDP) is more important than the measurement you like that doesn’t directly relate to economic growth (employment). I can’t believe I’m even having to make that point.

The other point you attempt to make — that the change in oil prices was a big factor in the pretty decent 2Q08 GDP number isn’t supported by the facts. It’s not there, and you’re repeating it doesn’t make it so.

In fact, the worry at the time was that the growth was inflationary.

Oil, schmoil. 2Q08 was pretty decent, and absent evidence NBER has not presented, sure as bleep wasn’t recessionary.

The burden of proof is on NBER to show why there was, for the first time EVER, a recession with two quarters of positive growth. They haven’t met the burden. They may eventually, but they haven’t yet.

The NBER uses more than one factor to determine recession. Past recessions have included individual quarters of positive GDP growth. Why would it be categorically different to have two quarters of GDP growth rather than one? This is an arbitrary measure that does not meet the definition NBER uses for recession. Furthermore, GDP growth in this case does not reflect actual economic output, but rather a change in the underlying deflation calculations due to extremely high oil prices. A point you failed to address.

As to your claim that 2.8% “isn’t that much growth,” surely you jest

No, I’m quite serious. 2.8% growth for one quarter isn’t that much growth, especially when you consider how that number is calculated – and realize that without the run-up in oil prices, the number would be negative. 2.8% growth sustained over time can be a lot of growth, but for an isolated quarter isn’t that much – heck, this ‘growth’ was more than reversed by the end of the year.

As to your claim that the Bush years were predominantly “paper growth,” on what basis?

Aside from the collapse of the stock and housing markets? The whole Bush economy was based on inflated asset valuation. No significant job growth, worsening long term unemployment, falling wages, and far below normal GDP growth. Much consumption was financed through home equity, which has now been undermined.

The housing runup was nowhere near as overheated as the 75%-plus declining dot-com bubble.

I will grant you that dot-com devaluations were even more dramatic than the housing collapse has been, but keep in mind that the sheer size of the housing market makes it much more significant. Comparing the two as if they were equivalent would be foolish – the housing collapse is much worse.

And no, employment is NOT a more rational measure of an economy’s health. If that were the case, Cuba, where Fidel has virtually everyone of working age “employed” doing something, would be the greatest economy in the world. The total value of goods and services produced in an economy, and whether that total value is rising or falling, is much more rational.

I didn’t say the only rational measure was employment – just that it is probably more important than GDP. Consider if our GDP were shrinking, but median income was rising and employment was rising toward 100%. Why would we focus on GDP growth as the most important factor? An economy’s health can be measured in many ways – and GDP is a very flawed measure to use as your sole determinant. If you want to debate the merits of the Cuban economy, that is an entirely different topic.

Again, the GDP numbers from last year don’t indicate a recovery – they are the odd consequence of the inflated price of oil at the time. No recovery occurred to be halted by Democrats. Despite your insistence that GDP is the most meaningful indicator of economic activity, the NBER makes the call based on the big picture, not your favorite statistic.

Peace.

DS

The burden of proof is on NBER to show why there was, for the first time EVER, a recession with two quarters of positive growth. They haven’t met the burden. They may eventually, but they haven’t yet.

There is NO doubt that the economy tanked in June/July, and that it has continued to do so since then at an accelerating rate. The two quarters of negative and worsening economic growth (3Q08 and 4Q08), i.e., a recession as normal people define it, demonstrate that. I think my explanations as to the causes of the second-half crumble are far more sensible than anyone else’s alternative explanations. Not to mention that I called it when it started, and cited why it had started.

As to your claim that 2.8% “isn’t that much growth,” surely you jest —
- in 62 years, my rough count is that 107, or about 43% of all quarters out of 248, have had growth of less than 2.8%. That’s not too far from the middle. I’m all for high standards, but we’re talking about whether a quarter that was better than 43% of those previously and since is recessionary. The very idea is almost laughable.
- Average reported quarterly growth in the 30 years that ended in 2007 was 3.04%. 2Q08 came in lower than that by a “whopping” 0.24%.
- If continued, 2.8% growth would lead to the real value of an economy’s output doubling in just over 25 years.

At any rate, the issue isn’t whether it “isn’t that much growth,” it’s whether you can legitimately talk about the occurrence of a recession when there’s that much growth. If you want to, you better have a heck of a case. NBER hasn’t made it yet, and I’ve cited three instances relayed by them that contradict such a case.

As to your claim that the Bush years were predominantly “paper growth,” on what basis? There is a case that the last year or two of the Clinton economy was “paper growth,” given how much money was dumped into worthless dot-coms that weren’t real businesses and had no idea of how they would ever sell anything of value (and most didn’t. I don’t see a basis for building a similar case for 2003-2007. The housing runup was nowhere near as overheated as the 75%-plus declining dot-com bubble.

And no, employment is NOT a more rational measure of an economy’s health. If that were the case, Cuba, where Fidel has virtually everyone of working age “employed” doing something, would be the greatest economy in the world. The total value of goods and services produced in an economy, and whether that total value is rising or falling, is much more rational.

It’s almost as if you didn’t look at the chart of the last four recessions in the article.

That’s a pretty silly thought, since I was commenting on that chart.

You know as well as I that GDP is not the be-all of economic indicators, and that employment is a more rational measure of the economy’s health. What’s more, the GDP “growth” in the first half of 2008 can be attributed almost entirely to the inflated price of oil during the 2 quarters in question. There was no indication of a “recovery” anywhere to be found.

2.8% for a quarter is not “A little GDP growth.” And for cryin’ out loud, whether a recession exists is primarily about the presence or absence of real economic growth.

Really, it isn’t that much growth, and it isn’t “real economic growth” – it’s predominantly ‘paper’ growth, just like much of the imaginary GDP growth under Bush.

If GDP growth is present, as it was during the first half of 2008, someone claiming recession has to make an OVERWHELMING case with the other factors involved that a recession was nevertheless in progress. NBER in my opinion simply has not done that, both for reasons I’ve cited and other reasons I’m saving for another time.

GDP growth alone is not enough to indicate that the trough has reached bottom. Claiming that a recession has ended when the trough has not been reached requires OVERWHELMING evidence, because to do so clearly eviscerates the definition of a recession.

Really, I have no problem with questioning the data, but look at the big picture – there is a simple and logical explanation for the increase in GDP numbers, and it is not “recovery”. I’m not a trained economist, and even I can see it. I don’t mean to disrespect the hard work that went into writing your column, but if you are going to claim that the Democrats derailed the economy or halted a recovery you have to make an OVERWHELMING case. I don’t see it. Maybe those reasons you are saving for another time can save your hypothesis?

Peace.

DS

Guys go ahead and blame GWB if you want. However, he couldn’t undo established loans. He didn’t create the legislation. He didn’t give it the teeth and means to grow uncontrollably. You can thank Clinton and Barnie Frank for that.