Posted on 05/12/2012 11:53:36 AM PDT by Signalman
Yes, U.S. GDP is still rising, according to the latest reports. But that doesn't mean we've dodged a new recession.
Sound surprising? What most people don't understand is that recessions often begin when gross domestic product is still showing positive growth.
Four of the past six recessions started during a quarter when GDP was growing, as did 72% of all recessions in the past 94 years .
How can that be? The answer is that expansions end -- and recessions begin -- at the peak of the business cycle, after which the economy begins to contract. _________________________________________________
One reason we believe the economy is heading for recession now is weak job growth. Since February, job growth has turned down, as have other key indicators.
Ominously, in the past 60 years we haven't seen a slowdown where year-over-year job growth has dropped this low without recession.
Separately, for the past three months, year-over-year growth in real personal income has stayed lower than it was at the start of each of the past ten recessions. These are facts, not forecasts -- so the popular story that more jobs will lead to more consumption is missing a key link, which is income growth.
In fact, our research shows a new recession is likely to start by mid-2012. Under the circumstances, complacency about U.S. recession risk is likely to prove badly misplaced. To top of page
(Excerpt) Read more at money.cnn.com ...
x Government spending
the economy has not exited the “Recession”
I'm sure that the German stock market and GDP were going through the roof (measured in deutchmarks) during the hyperinflation of the Wiemar Republic.
Four of the past six recessions started during a quarter when GDP was growing, as did 72% of all recessions in the past 94 years .
How can that be? The answer is that expansions end -- and recessions begin -- at the peak of the business cycle, after which the economy begins to contract.
Sounds like they are playing word games with quantization of when data is collected. During the quarter when the recession starts it could start in the first, second or third month. Unless the drop is in the first month of the quarter there will be some growth during the first quarter of a recession.
A bigger concern is that the recession is based on the real GDP, which is the nominal GDP minus the inflation rate. I believe that the inflation rate is intentionally understated thus we may already be into that recession.
That is because the economy isn't growing on its own, but by borrowing foreign money to pay for unemployment benefits and make work jobs. Obama has managed to improve the numbers through borrowing, but the fact he's still borrowing shows he hasn't fixed the problems.
A point well taken! (Even if the Deutschmark wasn't introduced until after WW II; prior to that, during the Weimar Republic, it was called the "Reichsmark" or "Rentenmark.")
Regards,
The foreigners don't even want our debt anymore. China's decided to buy gold, instead. Last year, 61% of the debt was purchased by the Fed using newly-printed money.
The dirty secret though is that the NBER doesn’t go by a fixed definition of recession. The MEDIA will tell you that a recession means that there have been two quarters of negative growth. But the NBER declared a recession in Dec. 2007, even though between Dec. 2007 and August 2008, the real economy grew by 3.5%. When they were asked to explain themselves, they said that the 2 negative quarters rule is not a firm rule. They consider a lot of things.
The CPI leaves out BOTh Fuel and food, Because nobody ever eats, drives or ships anything.
Nobody wants our paper. It is worth less than toilet paper. It is being paid back with inflated dollars yet pays close to nointerest!
Do you have a source for those numbers? I'd like to know who the remaining 39% was purchased by.
Here you go.
Unfortunately, borrowing 39% of our debt from sources other than ourselves is still a lot of money we have to repay, but all any of this does is kick the can down the road. Of course it has occurred to me that, for the purpose of getting re-elected, that's all Obama thinks he has to do.
Copy the title of a WSJ article and paste it into Google's search bar. The first result (occasionally the second) will be a free pass for the entire article. Google and WSJ cut that deal a couple years ago.
borrowing 39% of our debt from sources other than ourselves is still a lot of money we have to repay
The rest of it is not entirely from foreigners, perhaps even a minority of it. But, in the end, it has to be repaid no matter who borrowed it. Lending it to foreigners rather than Americans has no economic effect.
In fact, printing the money to buy the debt is disastrously worse than foreigners' buying it with honest-to-goodness money that they've earned by producing tangible goods.
Foreign sources bought .9% (not 9%, point-9%) of our debt.
Lending it to foreigners rather than Americans has no economic effect.
The effect is when the money is paid back with interest to Americans instead of foreigners. That could be a good thing, assuming the administration in power at the time shows more regard for its bond holders than the current administration did for GM and Chrysler's bond holders.
In fact, printing the money to buy the debt is disastrously worse than foreigners' buying it with honest-to-goodness money that they've earned by producing tangible goods.
The administration doesn't care as long as it kicks the can down the road long enough to see it through the elections.
OK. I can see your point.
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