Economic Rebound? What Economic Rebound?
Last week, the Associated Press’ Jeannine Aversa announced the top ten business stories of 2009, according to an AP survey of newspaper editors.
Not surprisingly, the top story involved the economy. Incredibly, the editors apparently framed it (or maybe the AP framed the survey question for them) as, “Recovery from Great Recession.” Further, Aversa later described the result as “Economy’s Fall -- and Rebound.”
This result brings to mind a scene in Breaking Away, a truly underrated movie. In that scene, the story’s lead character Dave (played by Dennis Christopher) begins a brief stint helping out at his father’s (Paul Dooley) used car dealership. It’s brief because when an unhappy buyer returns his vehicle, Dave quickly gives him his money back. Dad’s incredulous response when told is “Refund? REFUND?”
My adverse reaction to Aversa’s description of 2009’s economy is similar to that of Dave’s dad: Rebound? REBOUND?
Her assertion is objectively false. You haven’t “rebounded” until you’re back to where you were. Even if economic growth for the fourth quarter comes in at 4% as some predict, the economy won’t even be 40% of the way back from where we were before the recession as normal people define it (“a decline in GDP for two or more consecutive quarters”) began.
More fundamentally, there’s the “little” matter of whether the recession is really over.
As normally defined, the answer of course is simple, which is why we should prefer objective standards for these types of things. The third quarter’s positive annualized growth of 2.2% does indeed mean that the recession ended after four quarters of negative growth that began in July 2008.
But the normal definition is not the one the press has been using. Aversa, AP, and most of the rest of the press have spent the past year telling us that the recession began in December 2007 because the supposedly apolitical academicians at the National Bureau of Economic Research subjectively ignored their own evidence and said so. Now all of a sudden, as seen in this excerpt, Aversa is no longer averse to the normal definition:
After four quarters of decline, the economy returns to growth during the July-to-September period, signaling the end of the deepest and longest recession since the 1930s.
If she were fair, balanced, and consistent, Aversa would be waiting for an NBER determination before concluding that the recession is over. Do you think Jeannine’s shifting definition might have something to do with the fact that it helps Dear Leader?