News What is wrong with the US economy? Part 2

[Office_Shredder]

Ok. You caught me. But like politics, I haven't followed the market in 30 years.
The DJIA dropped from about 11,000 to 8,500(-23%) between '01 and '03, but went back to 10,500 in '04.
Not quite the level of the current crash: 14,000 to 8,500(-40%)
Does anyone think we'll get back to at least 13,000 by this time next year?

Who knows? On the other hand, the NASDAQ tanked 80% during the dot com bust and is still only at half the level it was at the (admittedly artificial) high around 2000 (but who's to say the previous stock market value wasn't artificial too?)

 

[Proton Soup]

well, have we really increased productivity that much, or have we just changed metrics? if we've changed metrics, then much of the panic is out of proportion.

and the other thing that occurred to me, later... is ca. 1980 when many companies stopped paying dividends?

 

[Gokul43201]

Maybe someone should go back through this thread and count how many times jimmysnyder expressed confidence that the US economy was not in recession since last December??

Zero.

These don't count?

Some posts, in reverse chronological order:

What a difference a word makes. Mr. Volker knows that the nber decides when recessions begin and end, not former Fed chiefs. The nber has not. Don't give up hope though.

Technically, we're in a recession when the nber says we're in a recession. The nber has not said that we're in a recession. So technically, we're not now in a recession. Don't give up hope though.

Hopes for a recession were dealt a very hard blow today.
...
I don't know how these things work, but I doubt the NBER is going to declare a recession with a negative 1.9% decrease. Don't give up hope though, the previously reported 0.6% increase in the last quarter of 2007 has been revised to a positive 0.2% decrease.

Hopes that the US economy was in recession were dealt a setback today when the Commerce department issued a revision to the 1st quarter GDP numbers. Optimists were looking forward to the revised numbers to wipe the excreme?t-devouring grin off my ugly face. Too bad. Don't give up hope though.

Another beautiful theory destroyed by an ugly fact.

Frankel cautions against giving up hope.

Frankel is a member of the NBER Business Cycle Dating Committee. These are the people that meet after every recession to let you know that there had been one. One of the things they look for is two consecutive quarters of negative GDP growth. However, that is not the only criterion they look at, so keep your fingers crossed. On the down side, I doubt that they will declare one when we haven't even had one quarter of negative GDP growth. When they finally give into popular opinion they will have lost all purpose in life.

There is no recession.

Here's a new definition of recession: When a president and chief investment officer at an advisory says that "employment is clearly staying more solid than a recession would indicate", then it's not a recession.

OK, so far I'm argumentative, insubstantiative, insecure, wrong, and shouldn't bother replying at all. But at least I'm not daft. Only my arguments are. And even that is under review. But we are not in a recession. Don't give up hope though.

I decline to agree that I am daft. Thanks for the suggestion anyway. When the NBER says we were in a recession, you can gloat all you want. To me you all sound like Hillary.

Here is yet another definition of recession:
When the current president of the NBER says unequivocably back in March that we are in a recession, even though in May he said unequivocably we are not in a recession.
...
Actually, the definition of a recession is when the NBER says we are in a recession. They haven't. We aren't. Don't give up hope though.

More like 232 years according to the mood of this thread. But only in eastern Kentucky. The rest of the country doesn't have the recession it needs. Don't give up hope though.

As long as we are willing to rely on opinions and not facts we are in a recession of a non-economic sort.

Hopes that the US was in a recession were dealt a setback today.

GDP was up in the first quarter 2008

A recession is defined as two consecutive quarters of negative growth in GDP. We haven't had a negative quarter since December 2001. Egad pessimists, what does the economy have to do before you'll admit we aren't in a recession? If you're not optimistic, you haven't been paying attention.

 

[mheslep]

These don't count?

Some posts, in reverse chronological order:

Nope. The point, as JS made repeatedly, was that a recession is declared by the NBER and not another. Other people are free to point to economic down/up turns, observe the various economic indicators and comment thereon as they see fit. They do not get to declare a recession, period.

 

[Astronuc]

The Dow 30 components have been changed as some fall out (stock price collapses, e.g. AIG) and others take their place. The Dow is supposed to represent the broader market.

Some companies cut back on or eliminated dividends in the 80's and 90's, particularly those in the NASDAQ, but they did not necessarily reinvest in the companies as much as they filled the pockets of management. One can check the dividends for any company through their filings with the SEC or go on-line.

Now these companies do have the option of declaring one-time or special dividends, or do a cash distribution to shareholders, and some have done so. One has to be holding the shares at the time of the declaration to benefit.

 

[Gokul43201]

Nope. The point, as JS made repeatedly, was that a recession is declared by the NBER and not another. Other people are free to point to economic down/up turns, observe the various economic indicators and comment thereon as they see fit. They do not get to declare a recession, period.

The point that others made to JS was that the NBER only calls a recession several months after the fact. So, to speculate whether or not we are currently in a recession, you can not use the NBER's silence at that moment to pronounce, as jimmy did on May 22, that "there is no recession."

Furthermore, JS said a lot more that you claim he did. He expressed his own personal opinion of the economic situation.

From Jul 31: "...I doubt the NBER is going to declare a recession...".

And on May 29:"... I doubt that they will declare one when we haven't even had one quarter of negative GDP growth. When they finally give into popular opinion they will have lost all purpose in life."

I'm not sure what jimmy meant by that last sentence. Has the NBER now lost all purpose in life?

 

[quadraphonics]

Nope. The point, as JS made repeatedly, was that a recession is declared by the NBER and not another.

Actually, that was a point I made repeatedly, which was only accepted by JS after much argumentation.

Other people are free to point to economic down/up turns, observe the various economic indicators and comment thereon as they see fit.

Indeed, and that's why I asked for instances in which JS expressed confidence that we are not in recession (i.e., that NBER would not declare a recession to have been occurring at the date when the comment was made). Although, as Gokul's research shows, JS did indeed categorically declare that the US was not in recession, even after the issues relating to the NBER were brought up.

I'm just taking him up on his offer to let us gloat all we wanted once the NBER had ruled that a recession was in effect :] He went pretty far out on a limb on this issue, and said limb has now decisively broken off beneath him.

 

[Astronuc]

Americans' Food Stamp Use Nears All-Time High
http://www.washingtonpost.com/wp-dyn/content/article/2008/11/25/AR2008112502553.html
By Jane Black
Washington Post Staff Writer
Wednesday, November 26, 2008; Page A01

Fueled by rising unemployment and food prices, the number of Americans on food stamps is poised to exceed 30 million for the first time this month, surpassing the historic high set in 2005 after Hurricane Katrina.

The figures will put the spotlight on hunger when Congress begins deliberations on a new economic stimulus package, said legislators and anti-hunger advocates, predicting that any stimulus bill will include a boost in food stamp benefits. Advocates are also optimistic that President-elect Barack Obama, who made campaign promises to end childhood hunger and whose mother once briefly received food stamps, will make the issue a priority next year.

"We soon will have the most food stamps recipients in the history of our country," said Jim Weill, president of the Food Research and Action Center, a D.C.-based anti-hunger policy organization. "If the economic forecasts come true, we're likely to see the most hunger that we've seen since the 1981 recession and maybe since the 1960s, when these programs were established."

The Agriculture Department is set to release the new numbers as early as this week. Agency officials declined to confirm the figures but outlined them in a briefing last month for advocates and administrators of state food stamp programs. Breaking the symbolically important 30 million mark comes on the heels of government data showing that 11.9 million people went hungry in the United States at some point last year. That included nearly 700,000 children, up more than 50 percent from the year before.

Food pantries and other charitable organizations are also reporting an increase in demand from those in need. Visits to local pantries are up by 20 to 100 percent over the past six months, and calls to the Capital Area Food Bank's hunger hotline have jumped 248 percent. Most are from people who have never used food stamps or a pantry before, said Lynn Brantley, the organization's president and chief executive.

. . . . Although prices have fallen from the levels of this past spring, they remain high. In October, the consumer price index for food and beverages had jumped 6.1 percent over last year. Staples such as eggs and bread rose even faster.

For low-income families, who spend a higher percentage of their monthly budget on food, that rise has been particularly painful. Food stamp benefits are adjusted for inflation only once a year, and as of September, the maximum benefit fell $64 a month short of the cost of the thriftiest, USDA-established diet for a family of four. The annual adjustment in October of 8.5 percent largely brought the benefit in line with food costs again, but the Center on Budget and Policy Priorities, a nonpartisan policy group, estimates that if current inflation persists, by December benefits will again fail to match the cost of the thrifty food plan.

. . . .
The benefits, which average $109.93 a month ($3.66/day) per person, are based on a plan set by the government to represent a low-cost but nutritionally adequate diet. Participants apply locally to receive an electronic card that is used like an ATM card to buy food at most grocery stores and some farmers markets. The maximum benefit for a household of four is $588 a month ($147/mo per person, or ~$4.90/day per person).
. . . .

More families turning to food banks
http://marketplace.publicradio.org/display/web/2008/11/28/mm_food_banks/


When the Downturn Sailed Into Savannah
http://www.nytimes.com/2008/11/30/business/economy/30econ.html

“You are seeing a fairly widespread recession, with all major components of demand now in decline,” said Brian Sack, an economist in Washington for Macroeconomic Advisers L.L.C., a consulting and forecasting firm. It expects the gross domestic product to decline in the fourth quarter at an annual rate of 4 percent, down sharply from the contraction of 0.5 percent in the third quarter.
. . . .
No one has a greater stake in keeping the recession mild than Doug J. Marchand, executive director of the Georgia Ports Authority, which operates the port here, a mile upriver from the Atlantic Ocean. It is now the fifth-largest port on the East Coast, as measured by cargo tons; most cargo is shipped in huge steel containers.
. . . .
But the tonnage in those containers, rising at an annual rate of 10 percent or more annually through most of the last 20 years, has lately “flattened,” as Mr. Marchand put it, to almost no rise at all — the first time that has happened in his 13 years as port director.

That unanticipated slowdown caught Savannah off guard. The city has four million square feet of newly built, never-occupied warehouse space, intended primarily as temporary quarters for the growing flow of imports. Big as hangars, these buildings sit shuttered and alone in industrial parks sprouting weeds.
. . . .
And so it goes across the Savannah economy: falling retail sales, fewer hotel bookings, a canceled convention, layoffs at Memorial Hospital, an announcement late this month that Great Dane Trailers, a major manufacturer, would soon close its factory here, and weakened tourism in a city that over the last 15 years has built an industry out of visits to its historic downtown.
. . . .
The Savannah Economic Development Authority, having signed up $360 million in new investment last year, has commitments this year for only $33 million.

Stocks eye dour jobs, shopping data
http://news.yahoo.com/s/nm/20081130/bs_nm/us_column_stocks_outlook

The Standard & Poor's 500 Index had its best week since at least 1980 -- jumping 12 percent. That's a turnaround from the previous week, when the S&P had its lowest close since 1997. For the four-day week, the Dow Jones industrial average rose 9.7 percent and the Nasdaq Composite Index (.IXIC) surged 10.9 percent. The U.S. stock market was closed on Thursday for Thanksgiving.

Still, steep losses among financial and automaker stocks made this [Nov] among the worst months for Wall Street since the October 1987 stock market crash. For November, the Dow fell 5.3 percent, the S&P 500 dropped 7.5 percent and the Nasdaq lost 10.8 percent.

Year to date, the Dow is down 33.4 percent, while the S&P 500 is off 39 percent and the Nasdaq is down 42.1 percent.
. . . .
U.S. payrolls probably shed 316,000 jobs in November, following October's drop of 240,000 jobs, according to economists polled by Reuters. The unemployment rate is seen rising to 6.8 percent in November from October's 6.5 percent.
. . . .

After 99 years, Woolworths goes bust [but not to worry - it's in the UK]
http://marketplace.publicradio.org/display/web/2008/11/27/woolworths/

Scott Jagow: More dire economic news from overseas. In Britain, more than 30,000 jobs are in jeopardy after a major retailing firm collapsed. That would be Woolworths -- the low-cost chain has gone bust after 99 years. From London, Stephen Beard reports.

--------------------------------------------------------------------------------

Stephen Beard: Woolworths, an off-shoot of the American five and dime stores, has over 800 shops in Britain. They all face closure. The company went bankrupt last night after its bankers pulled the plug.

The timing is unprecedented, with almost a month to go before Christmas. British consumers are famous for their prodigious levels of shopping throughout the festive season.

To pull the plug now shows how desperate for cash the banks have become, says analyst Robert Clark.

Robert Clark: The irony of it is with Woolworth that it actually makes money at Christmas -- it's the only time that it does make money. So it would probably have been profitable trading fully through Christmas.

Britain's Times newspaper had said Woolworths was in discussions with Hilco UK Limited, a firm that buys underperforming retail businesses and turns them around for profit. The sale price would be a nominal 1 pound ($1.50), according to the report. Hilco declined to comment.

In August, Woolworths rejected a 50 million pound offer for its retail division from Iceland Foods Ltd.


In the US, Harold's will be closing the doors of its 43 stores in 18 states and holding a giant liquidation sale.


Pilgrim's Pride files for bankruptcy protection (AP)
By EMILY FREDRIX, AP Food Industry Writer, MILWAUKEE
http://marketplace.publicradio.org/apheadline_detail.php?story_id=D94Q662O3&group=ap.online.headlines.business
Monday, December 1, 2008 05:35:14 PM PT

Pilgrim's Pride Corp. filed for Chapter 11 bankruptcy protection on Monday, hurt like other meat producers by volatile feed prices and slumping demand but also hobbled by an unmanageable debt load.

The Pittsburg, Texas-based company, the nation's largest chicken producer, sought protection in a filing with the U.S. Bankruptcy Court for the Northern District of Texas, saying that as of Sept. 27 it had $3.75 billion in assets and $2.72 billion in debts.

Pilgrim's Pride, which controls about 23 percent of the U.S. chicken market, will continue operating during the reorganization and will not liquidate its assets, spokesman Ray Atkinson said.
. . . .

And to top it off -

Saudi Arabia wants oil price at $75 a barrel
http://www.cnn.com/2008/BUSINESS/11/29/oil.saudi.arabia.opec.ap/index.html

CAIRO, Egypt (AP) -- Saudi Arabia said Saturday that it hoped to raise oil prices to $75 a barrel, but indicated that no measures would probably be taken until an OPEC meeting next month in Algeria.

Good thing that they are our friends.

 

[mheslep]

well, have we really increased productivity that much ...

Example: labor hours require to produce 100 bushels of wheat, US:
1830: 250-300 labor-hours (5 acres)
1890: 40-50 labor-hours (5 acres)
1930: 15-20 labor-hours (5 acres)
1955: 6 1/2 labor-hours (4 acres)
1965: 5 labor-hours (3 acres)
1975: 3-3/4 labor-hours (3 acres)
1987: 3 labor-hours (3 acres)
and last year, 2007, 100 bushels of wheat were grown organically on one acre.

So while the US population increased 25x, the labor productivity increased 300x plus.
http://www.agclassroom.org/gan/timeline/farm_tech.htm
http://www.montana.edu/cpa/news/nwview.php?article=5704

 

[Jimmy Snyder]

Today the NBER announced that we have been in recession since December of last year. I felt that even though things were bad, they weren't that bad. To those whose hopes were fulfilled, and who now gloat over my abject defeat, I offer no regrets, only my congratulations on your prescience. Go easy on me. After all, I had always encouraged you to keep on hoping.

 

[Jimmy Snyder]

Actually, that (a recession is declared by the NBER and not another) was a point I made repeatedly, which was only accepted by JS after much argumentation.

I don't recall that exchange. In post #490, page 31 of this thread:
https://www.physicsforums.com/showthread.php?t=130611"
I had indicated that I knew the definition. Did you convince me of it before or after post #490?

 

[turbo]

Today the NBER announced that we have been in recession since December of last year. I felt that even though things were bad, they weren't that bad. To those whose hopes were fulfilled, and who now gloat over my abject defeat, I offer no regrets, only my congratulations on your prescience. Go easy on me. After all, I had always encouraged you to keep on hoping.

Hi, Jimmy! Astronuc and I and others have been pointing out for a LONG time that our economy was in trouble and was in fact in recession. You gleefully denied that we were in recession (for what reason I do not know) and claimed that we "hoped" that the US was in recession in advance of the NBER pronouncement (ALWAYS made well after the fact!)

Welcome to the real world.

best regards...
Skip

 

[lisab]

Today the NBER announced that we have been in recession since December of last year. I felt that even though things were bad, they weren't that bad. To those whose hopes were fulfilled, and who now gloat over my abject defeat, I offer no regrets, only my congratulations on your prescience. Go easy on me. After all, I had always encouraged you to keep on hoping.

jimmy, although I never knew quite what your intent was in your posts, I always gave you the benefit of the doubt that your intent wasn't simply to be mean. I don't pick that up in any of your posts, ever.

But I don't think you ever saw the economy through my eyes. I work in a lab that serves the building industry. We've been in a recession for many, many months. But things have taken an ugly turn in the last few weeks, from bad to unprecidented. We're looking at a 50% cut in income in the next quarter - and possibly worse in the quarter after that. I expect to lose my job.

I just assumed you worked in a field that was more shielded from the storm than mine is.

BTW, the president of my company has announced that the hit list will be announced on Jan 5th - sigh!

 

[quadraphonics]

I don't recall that exchange. In post #490, page 31 of this thread:
https://www.physicsforums.com/showthread.php?t=130611"
I had indicated that I knew the definition. Did you convince me of it before or after post #490?

It is true that you mentioned the NBER's arbitration role in that post, but the understanding evident in your subsequent comments was perverse to the point of either basic misapprehension or dishonesty. See post https://www.physicsforums.com/showpost.php?p=1737376&postcount=576", for example:

Actually, the definition of a recession is when the NBER says we are in a recession. They haven't. We aren't.

 

[Jimmy Snyder]

I always gave you the benefit of the doubt that your intent wasn't simply to be mean.

Thank you. The economy is not made of things, it is made of people. When the fabric of society is strong, the economy thrives. I have been a cheerleader for saying that we were not in recession. It was not merely to win an argument, but to have a real effect on peoples' attitudes. I still think that if I got one person to look to the future with hope, who otherwise would not have done so, then I had done my part to improve the economy. Aside from keeping my own spirits up, of course. The internet is famous for masking peoples' intents and many flame wars get started on that account. I hope you won't mistake my upbeat message for meanness, nor give into anyone else's call for hopelessness. I could easier ascribe meanness to their intents.

 

[Al68]

jimmy, although I never knew quite what your intent was in your posts, I always gave you the benefit of the doubt that your intent wasn't simply to be mean. I don't pick that up in any of your posts, ever.

But I don't think you ever saw the economy through my eyes. I work in a lab that serves the building industry. We've been in a recession for many, many months. But things have taken an ugly turn in the last few weeks, from bad to unprecidented. We're looking at a 50% cut in income in the next quarter - and possibly worse in the quarter after that. I expect to lose my job.

I just assumed you worked in a field that was more shielded from the storm than mine is.

BTW, the president of my company has announced that the hit list will be announced on Jan 5th - sigh!

Funny thing about the word "recession". It's definition depends on who's using the word. The only definition I know of that is objective is a drop in GDP for 2 consecutive quarters.

Of course that definition isn't useful at all for those that want to mislead the public. They would much prefer a subjective, variable definition.

Because anyone who claimed that the GDP dropped 2 consecutive quarters could just be called a liar outright. Of course, nobody is claiming that, they're just saying we're in a "recession", whose definition is whatever they think it should be at the time.

Well, any definition that's not objective and clear cannot possible be useful to me.

So, those that say we're in a recession, do you have a definition that is objective and concise enough for me to even be able to agree or disagree?

 

[Jimmy Snyder]

So, those that say we're in a recession, do you have a definition that is objective and concise enough for me to even be able to agree or disagree?

Yes and no. Many consider the NBER (National Bureau of Economic Research) as the arbiter of when recessions start and end. You could say that it is objective and concise in the sense that they make public their decision and when they do, you know what their decision is. However, they do not publish the exact criteria that they use. I'm pretty sure that they do not have a precise definition.

Yesterday the NBER announced that we have been in a recession since December of last year. msn.com ran the story with a headline that said something like "It's official, we're in a recession". That gives you an idea of how some people regard the NBER's judgement. None the less, there is a celebrity flavor to it all, the NBER is famous for being famous. Anyone who wants to can claim that we are not in a recession and if you do, a measure of your officialness will be the number of people who accept your announcement. As for myself, I accept the NBER's announcement.

 

[Astronuc]

Funny thing about the word "recession". It's definition depends on who's using the word. The only definition I know of that is objective is a drop in GDP for 2 consecutive quarters.

Of course that definition isn't useful at all for those that want to mislead the public. They would much prefer a subjective, variable definition.

Because anyone who claimed that the GDP dropped 2 consecutive quarters could just be called a liar outright. Of course, nobody is claiming that, they're just saying we're in a "recession", whose definition is whatever they think it should be at the time.

Well, any definition that's not objective and clear cannot possible be useful to me.

So, those that say we're in a recession, do you have a definition that is objective and concise enough for me to even be able to agree or disagree?

The 3Q08 GPD decline was revised from -0.3% to -0.5% (I believe that is an annual rate), but the 4Q08 is expected to have a more severe decline. One estimate puts it at -4% (annual rate), but we won't know until Jan or Feb 09.

However this has some insight - Officials Vow to Act Amid Signs of Long Recession
http://www.nytimes.com/2008/12/02/business/economy/02econ.html

and

All Recessions Not Created Equal (I would suggest downloading/saving the graphic)
http://www.nytimes.com/imagepages/2008/12/02/business/02econ.graphic.html

Two consecutive decline in GDP is just one definition of recession, and I think 3 quarters of negative growth (not consecutive) would be another definition, but then there are several components to consider of which GDP is one, as well as personal consumption, employment and housing prices. The decline in housing prices is perhaps the biggest problem in addition to credit defaults and bankruptcies, which have snowballed because of the derivatives (e.g. credit default swaps and securitized debt). The economy has been too highly leveraged (actually over-leveraged) for well over a year.


And as a reminder - please don't personalize disagreements, but be civil and address the comments. And no gloating.

 

[kronon]

Confirmation here of what many of us have been saying for while: Its all about politics. Bad quantitative models, 15 standard deviation events and restrained regulators are just local symptoms of an over-arching political policy.



WASHINGTON (AP) — The Bush administration backed off proposed crackdowns on no-money-down, interest-only mortgages years before the economy collapsed, buckling to pressure from some of the same banks that have now failed. It ignored remarkably prescient warnings that foretold the financial meltdown, according to an Associated Press review of regulatory documents.

The administration's blind eye to the impending crisis is emblematic of its governing philosophy, which trusted market forces and discounted the value of government intervention in the economy. Its belief ironically has ushered in the most massive government intervention since the 1930s.

Many of the banks that fought to undermine the proposals by some regulators are now either out of business or accepting billions in federal aid to recover from a mortgage crisis they insisted would never come. Many executives remain in high-paying jobs, even after their assurances were proved false.



http://www.google.com/hostednews/ap/article/ALeqM5hTDPY8hFtJLxsv8i1Q7OvoRrlYrQD94PQ0JO0

 

[Jimmy Snyder]

Funny thing about the word "recession". It's definition depends on who's using the word. The only definition I know of that is objective is a drop in GDP for 2 consecutive quarters.

By the way, this is not the first time that NBER has declared a recession without a drop in GDP for 2 consecutive quarters. The GDP figures were much worse in the 2000 recession:

09/00 -0.5
12/00 +2.1
03/01 -0.5
06/01 +1.2
09/01 -1.4

compare to:

12/07 -0.2
03/08 +0.9
06/08 +2.8
09/08 -0.5

 

[OmCheeto]

And as a reminder - please don't personalize disagreements, but be civil and address the comments. And no gloating.

Yah! Let's all hold hands and sing a http://www.youtube.com/watch?v=jHPOzQzk9Qo".

And turn these lemon's into lemonade.

Good things about a recession:

http://useconomy.about.com/od/grossdomesticproduct/f/Recession.htm"
it will cure inflation

http://kay.net.nz/2007/10/25/is-a-recession-bad/"
The whole economic cycle includes recession. It’s normal. It’s like having night after day, ying and yang, breathing out after breathing in. You get the idea!

The following is about one of the few human devices that makes me want to buy a gun.

http://www.monbiot.com/archives/2007/10/09/bring-on-the-recession/"
On Sunday I visited the only UN biosphere reserve in Wales: the Dyfi estuary. As is usual at weekends, several hundred people had come to enjoy its beauty and tranquility and, as is usual, two or three people on jet skis were spoiling it for everyone else. Most economists will tell us that human welfare is best served by multiplying the number of jet skis. If there are two in the estuary today, there should be four there by this time next year and eight the year after. Because the estuary’s beauty and tranquility don’t figure in the national accounts (no one pays to watch the sunset) and because the sale and use of jet skis does, this is deemed an improvement in human welfare.

http://radar.oreilly.com/2008/10/effect-of-the-depression-on-te.html"
First, this recession will be good for innovation because recessions generally are. During boom times, companies direct development and occupy great talent with at best evolutionary improvements over the state of the art. Companies are great chasers of new things, but aren't great at making new things. A recession means technologists cease to be paid vast amounts to duplicate the work of others.

And don't forget to whistle!

 

[Al68]

You could say that it is objective and concise in the sense that they make public their decision and when they do, you know what their decision is. However, they do not publish the exact criteria that they use. I'm pretty sure that they do not have a precise definition.

Well, sure, it's an objective fact that NBER has determined that we're in a recession. But without an objective, precise definition, that fact is of no use to me in any solid way.

If whether or not we're in a recession is just a matter of opinion, it has no real, objective meaning.

In other words, whether or not we're in a recession (without a precise definition) is unverifiable by any objective means. That makes the word nothing more than a political tool.

 

[mgb_phys]

In other words, whether or not we're in a recession (without a precise definition) is unverifiable by any objective means. That makes the word nothing more than a political tool.

Even with a precise definition (negative growth for n months) it's still pretty meaningless.
On a personal level.
Use credit card to buy more stuff, borrow money to pay credit card = prosperity and growth.
Decide to get rid of extra car and use transit = recession and povery

 

[russ_watters]

By the way, this is not the first time that NBER has declared a recession without a drop in GDP for 2 consecutive quarters. The GDP figures were much worse in the 2000 recession:

09/00 -0.5
12/00 +2.1
03/01 -0.5
06/01 +1.2
09/01 -1.4

compare to:

12/07 -0.2
03/08 +0.9
06/08 +2.8
09/08 -0.5

Here's the thing: the NBER did not judge the "2000 recession", as you are calling it, to have started until March of 2001. I am disheartened by the NBER's judgement because the are not using consistent criteria. Here's what they've said:

The committee views real GDP as the single best measure of aggregate economic activity. In determining whether a recession has occurred and in identifying the approximate dates of the peak and the trough, the committee therefore places considerable weight on the estimates of real GDP issued by the Bureau of Economic Analysis of the U.S. Department of Commerce.

http://www.nber.org/cycles/recessions.html

The committee gives relatively little weight to real GDP because it is only measured quarterly and it is subject to continuing, large revisions

http://www.nber.org/cycles/november2001/

The committee believes that the two most reliable comprehensive estimates of aggregate domestic production are normally the quarterly estimate of real Gross Domestic Product and the quarterly estimate of real Gross Domestic Income, both produced by the Bureau of Economic Analysis. In concept, the two should be the same, because sales of products generate income for producers and workers equal to the value of the sales. However, because the measurement on the product and income sides proceeds somewhat independently, the two actual measures differ by a statistical discrepancy. The product-side estimates fell slightly in 2007Q4, rose slightly in 2008Q1, rose again in 2008Q2, and fell slightly in 2008Q3. The income-side estimates reached their peak in 2007Q3, fell slightly in 2007Q4 and 2008Q1, rose slightly in 2008Q2 to a level below its peak in 2007Q3, and fell again in 2008Q3. Thus, the currently available estimates of quarterly aggregate real domestic production do not speak clearly about the date of a peak in activity.

http://wwwdev.nber.org/dec2008.html

At least in this most recent case, they gave a reason for disregarding their criteria.

From Astronuc's link, the current recession is the only one in recent memory to show positive GDP growth over the first year of the recession - except, of course, for the 2001 recession, who'se dates miss two quarters of negative gdp growth!

From the wiki on the 2001 recession:

In early 2004, NBER President Martin Feldstein said:

"It is clear that the revised data have made our original March date for the start of the recession much too late. We are still waiting for additional monthly data before making a final judgment. Until we have the additional data, we cannot make a decision."

http://en.wikipedia.org/wiki/Early_2000s_recession

Thus far, however, they have declined to revise the date. In fact, most of the criteria they use was later revised down:

The four series cited by the NBER in their decision about the recent business-cycle peak were revised as follows:

-Real personal income less transfers:When the NBER dated the recession, this series showed a generally steady rise throughout 2000 and early 2001. Subsequent revisions reveal that income peaked in October 2000.
-Nonfarm payroll employment: The data at the time of the recession announcement showed employment growing at a substantial pace in early 2001, with 287,000 jobs added from December 2000 to its peak in March 2001. Revised data show that employment grew less than one-third of this amount in early 2001 and peaked in February 2001.
-Industrial production:The original data used by the NBER showed that this series peaked in September 2000. Revised data show that this peak came even earlier, in June 2000.
-Manufacturing and trade sales: Original data showed a peak in August 2000; the most recent data show a peak in June 2000.

http://www.econbrowser.com/archives/2006/08/the_2001_recess.html

Now It is also surprising to me that they make no comment on the anomalous GPD readings this year. The reason for them should be obvious: the economic stimulus package put more money in people's pockets, which they spent in the first 6 months of this year. By my calculations, $600 given to each of about 200 million taxpayers works out to about 2% of our annualized GDP if spent in 6 months. This is real money spent by real people on real products and should carry a heavy weight because it did exactly what it was designed to do: override the effects of a recession.

All that said, the judgement would have been a lot easier had the economic stimulus package been passed a few months sooner.

 

[edward]

Who cares about the GDP and who declared what and when. The economy is a disaster. My son had to call six guys into his office this morning and tell them that they would not be getting their pay checks on the 5th. If they are lucky they might get a check on the 20th.

Sure they can quit , but the only jobs available in Arizona are for prison guards. (seriously)

 

[russ_watters]

Who cares about the GDP...

People who care about the economy and care about being objective care about the GDP. It isn't everything, it is just the most important indicator of the overall health of the economy.

...and who declared what and when.

This thread is in the Politics forum and not the Social Sciences forum for a reason: even though economics is supposed to be a science, the realitiy is that it is highly politicized.

The economy is a disaster. My son had to call six guys into his office this morning and tell them that they would not be getting their pay checks on the 5th. If they are lucky they might get a check on the 20th.

Sure they can quit , but the only jobs available in Arizona are for prison guards. (seriously)

And that is precisely why we need to look at broader indicators. In almost every economy, almost everyone knows someone who is unemployed, underemployed, or otherwise in economc distress. As I've reminded others, the title of this thread is "What is wrong with the US Economy", not, "What is wrong with the life of some guy edward knows".

 

[Astronuc]

Someone who works in one of those big financial companies -

The economic situation is quite tough, and people are losing their jobs every week. You might have heard, too - but Citi are set to let go of 52,000 people globally, RBS about 3,000, Credit Suisse are also cutting jobs this Friday, JPM as well. It is quite scary.

Some economists believe we have not seen the trough yet, others say it will be another Great depression, if not worse. There are conflicting views on how to cope with this.

While the Fed are making important decisions, some people claim the results will be less than satisfactory: they blame the credit creation for the crisis and point out the monetary injection will only worsen the situation (because that money will be created "out of thin air" once more).

I think CS is the one scheduled to lay off on Friday. I'm not sure about the others. JPM will trim WaMu staff by 9200.

RBS likely to cut 2,700 jobs; India may also see layoffs
http://www.banking-business-review.com/article_news.asp?guid=F21D5861-025F-4DB6-9484-7CBFBC071B42


Meanwhile - Auditors fault Treasury oversight of bailout funds
http://news.yahoo.com/s/ap/20081203/ap_on_go_co/financial_meltdown

WASHINGTON – The government must toughen its monitoring of the $700 billion financial bailout to ensure that banking institutions limit their top executives' pay and comply with other restrictions, federal auditors said Tuesday in the first comprehensive review of the rescue package.

The Treasury Department has no mechanism in place to track how institutions are using $150 billion in taxpayer money that the government injected into the banking system as of last month, the Government Accountability Office concluded in its report to Congress.

The auditors acknowledged that the program, created Oct. 3 to help stabilize a rapidly faltering banking system, was less than 60 days old and has been adjusting to an evolving mission.

But the 72-page report was bound to feed congressional concern that banks and other institutions are not being properly monitored and are not using the money to increase lending.
. . . .

 

[edward]

As I've reminded others, the title of this thread is "What is wrong with the US Economy", not, "What is wrong with the life of some guy edward knows".

They are one and the same Russ. You are apparently one of the people who only cares about their own self interests.. I will remind you that your turn to see that pink slip may also come one day.

 

[mheslep]

...

Now It is also surprising to me that they make no comment on the anomalous GPD readings this year. The reason for them should be obvious: the economic stimulus package put more money in people's pockets, which they spent in the first 6 months of this year. By my calculations, $600 given to each of about 200 million taxpayers works out to about 2% of our annualized GDP if spent in 6 months. This is real money spent by real people on real products and should carry a heavy weight because it did exactly what it was designed to do: override the effects of a recession. ...

If people spent the money. The evidence is they did not, instead they just banked it, or payed down debt. That is, the stimulus checks mailed last May had no effect on GDP via the consumption contribution. See the attached BEA sourced graph on personal consumption vs disposable income. Income clearly spiked up w/ the govt. checks, consumption went limp.
http://online.wsj.com/article/SB122757149157954723.html

 

[russ_watters]

They are one and the same Russ.

You know a guy who lost his job. Here's a story about 1,400 new jobs coming to Philly: http://www.nbcphiladelphia.com/news...ve-It-Philly-Employer-Hiring-1400-People.html
My anecdote is bigger than yours, so the economy must be doing spectacular! [/sarcasm]

See how useless anecdotes are?