Posted on 02/22/2004 4:07:13 PM PST by Dr. Marten
Gerard Jackson
BrookesNews.Com
Monday 23 February 2004
Mike Allen of the Washington Post reported that the NBER (National Bureau of Economic Research) now claims that the recession started in March 2001 (Recession's Timing Becomes an Issue 20 Feb). The problem with quoting this organisation’s views on the timing of recessions is that its dating process, including its definition of recessions, is basically useless.
Let's not forget that it wasn't until July 1991 that it finally came out and said the US had been in recession since August 1990, as if there wasn't a soul in the country who didn't already know that dismal fact. Anyway, the idea of actually dating the start of a recession is absurd.
In early 2000 I wrote that America would be in recession by the end of the year. In December of the same year I wrote an article titled The 'R' word casts its shadow across the US in which I stated that recession was already underway. As I said at the time:
"Now what Austrian analysis predicted for the capital goods industries is precisely what the BCA research group has found. Moreover, the decline in economic activity started some months ago. In addition, figures produced by the National Association of Purchasing managers strongly suggest that these industries are now in recession. I have no desire to be the cause of widespread depression (in the medical sense) but I think I need to remind readers that the American capital goods industries had already been in recession for several months before the 1929 October Wall Street crash."
That America was in recession before Bush took office was made clear by the Federal Reserve Bank of Philadelphia when its January outlook for regional manufacturing revealed the second sharpest month-to-month drop in the survey's 32-year history, even though unemployment was still only 4 per cent.
(In articles I wrote for The New Australian explained that the recession would start in manufacturing and that the consequent unemployment would be hidden by the increased demand for labour at the lower stages of production. Eventually, total unemployment would rise as the recession worked its way through the production structure. This is precisely what happened).
The apparent paradox between an economy that was 'booming' while manufacturing contracted flummoxed the vast majority of commentators, just as I said it would. For example, Steve Slifer, chief economist at Lehman Brothers, said: "It's really an odd-looking slowdown . . . The manufacturing sector is, in fact, in a recession. But not the overall economy. At least not yet." But a reasonable knowledge of economic history would have revealed that he was witnessing a classic economic turn down.
On 22 January 2004 the Joint Economic Committee's Vice Chairman Jim Saxton pointed out that successive monthly declines in manufacturing jobs had started in 2000. In addition, unemployment in manufacturing had been rising over a longer period. The unemployment situation was confirmed by the ISM's manufacturing employment index which in 2000 had fallen below 50, showing that unemployment was contracting.
How in heavens name could any economic research organisation worthy of the name miss these facts? Answer: lousy methodology. The NBER's supporters would be better informed on the course of booms and recessions if they took notice of Austrian analysis.
No matter what the Democrats and their media stooges claim, the recession began under Clinton and not Bush. Nevertheless, it would still be unfair to lay the blame at Clinton's feet. But then, unlike hardcore Dems like Kerry, Edwards and Kennedy, I strive to be scrupulously honest in my debates.
Gerard Jackson is Brookes' economics editor
Another answer: political bias.
last time I checked the recession was over -- and that after a catastrophic national calamity, a stock market crash, and a war.
you might want to consider detox.
Clinton enjoyed the Y2K boom. Many companies spent most of their budgets for up to 4 years to update their computer systems. Once updated their production went up and their need for employees went down and also their spending budgets were nil. He also rode the internet bubble that burst dramatically. Also there was 9/11 (Clinton refused Bin Ladin handed to him on a platter) and the east coast snipers and the scandals such as Enron etc. (which Clinton set the tone for), We may very well start to pull out of a lot of these problems under Bush. Hopefully the Dems won't get in and ride on the surge of the upswing under Republicans and take credit for it again and destroy things just in time for another Republican to get in and have to deal with the damages.
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