Posted on 06/19/2003 3:15:07 PM PDT by litany_of_lies
It has become an article of faith, even among those who really should know better, that we have been in a recession and continue to be in one. A main cause of the confusion is an organization known as The National Bureau of Economic Research (nber.org). This group seems to have appropriated to itself the right to declare the beginning and the end of a recession.
This supposedly nonpartisan economic research group has a membership boasting of 12 of 31 past Nobel Prize winners in economics and over 600 university researchers, headquarter in Cambridge, MA (no surprise there), and branches in New York City and Stanford U in CA (surprise, surprise). To be fair, it has a legacy dating back to conservative economic icon Milton Friedman. But I am here to tell you that today's NBER more closely resembles a collection of leftist partisan hacks who won't conced that the economy is doing well until it either runs over them or a Democratic retakes the White House.
The NBER's latest pronouncement (June 18) declares that:
According to the most recent data, the U.S. economy continues to experience growth in income and output but employment continues to decline. Because of the divergent behavior of various indicators, the NBER's Business Cycle Dating Committee believes that additional time is needed before interpreting the movements of the economy over the past two years.
In other words, these folks aren't ready to declare the end of the recession, and are stalling.
The NBER does this dance by inventing their own definition of a recession:
A recession is a significant decline in activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.
BALONEY.
The definition of a recession is not the wishy-washy subjective one noted above. Instead, the generally accepted definition of recession has been for years and continues to be (according to investorwords.com):
A period of general economic decline; specifically, a decline in GDP for two or more consecutive quarters.
It's that simple, and there's no subjectivity involved. We either are or aren't in a recession.
So, let's look at the facts. The following figures represent quarterly REAL (taking out inflation) Gross Domestic Product during the past three years (in billions):
Quarter Billions Change
1Q2000 9,097.4 --
2Q2000 9,205.7 +1.2%
3Q2000 9,218.7 +0.1%
4Q2000 9,243.8 +0.3%
1Q2001 9,229.9 -0.2%
2Q2001 9,193.1 -0.4%
3Q2001 9,186.4 -0.1%
4Q2001 9,248.8 +0.7%
1Q2002 9,363.2 +1.2%
2Q2002 9,392.4 +0.4%
3Q2002 9,485.6 +1.0%
4Q2002 9,518.2 +0.3%
1Q2003 9,562.9 +0.5%
Let's face it: The NBER won't let go of the recession in the face of contrary evidence. So what did they do? They redefined it. Sorry folks, no sale. No one is saying the economy is on fire, but it has be out of recession now for nearly two years.
Get over it and wake up, NBER.
And if anyone tries to tell you about the continuing recession, ask them "How we can be in a recession if the economy has been growing for the last six quarters (soon to be seven)?"
Gross Domestic Product (GDP), the measure of the USA's output of goods and services, is calculated by the Commerce Department's Bureau of Economic Analysis using the following items:
Consistant with this definition of GDP, would you care to enlighten us as to how much of the "growth" is attributable to unfettered Government deficit spending?
I have lived in good economic times, and bad economic times. In my 40 years in the job market, this is the worst I've ever seen.
Whatever figures you're posting do not accurately reflect the reality of the situation.
I mentioned to some friends of mine the other day that 30 years ago, when I was just out of the Army and really didn't know much, I was making $14 per hour as an electronic technician. Jobs were plentiful. Health insurance covered everything at the doctor of my choosing with no deductible. My rent was $150 per month, beer was $1.32 a six-pack for Coors, and new cars could be had for $2000. I had plenty of spending money left over each payday.
Here I am 30 years later with a BS in engineering, what some would consider wide experience building nuclear plants and as a systems engineer on the Shuttle program, as a licensed building contractor, and much more...yet I am still earning the same as I was 30 years ago. When I find work, that is.
In the meantime, similar cars now cost $20,000-$30,000, similar beer costs $6+ per six-pack, and rent is over $1,000 per month here in this low-wage area, and much higher in the cities.
Please don't tell me how great things are. It's just not true.
Thank you for listening...
If I remember my Econ 101 properly, Government spending, especially excessive spending, has traditionally had a smaller multiplier effect than private spending, meaning that it spreads its way through fewer hands than private spending. Therefore, I think it's safe to say that personal consumption has drive the real GDP growth we have experienced during the past 6 quarters.
The lack of job creation is very troubling, and I don't deny that for a minute. What we forget is that job growth is usually the last thing that happens when there is a recovery.
I also believe that the slow growth in total number of people employed is at least partially due to what I call the "Dr. Laura effect." Rush referred to Census Bureau data yesterday that showed that more women are staying at home with their kids and exiting the workforce. I would go so far as to say that we're in a slow "Dr. Laura" recovery because of the moms that have withdrawn. I'm not saying that moms (or a parent) shouln't stay at home with younger kids, but you have to recognize that it does have potential negative short-term consequences.
"Doesn't MATTER" ???
Gut instinct tells me that there's likely been an increase in personal consumption, so I won't argue that point.
But doesn't it bother you that Government expenditures may be ramping up uncontrolled while the private domestic investment component could be knocked flat on it's kiester???
Good grief.
Of course excessive government spending matters to the long-term well-being of the nation (for a lot of reasons including the potential crowding-out of private investment you noted), and the total lack of control is the second-biggest black mark on the Bush Administration during its first 2-1/2 years. The biggest is the total dereliction of duty on the immigration issue.
Essentially yes (though again I'm not saying moms staying at home is a bad thing-it's a GOOD thing).
Take this to the extreme: if half the workforce were women and all of them quit to stay at home at the same time, the value of goods and services subsequently produced in the economy (which is what Gross Domestic Product is) would drop by half (unless the men somehow got twice as productive because the women weren't distracting them-yuk, yuk).
Having said that, maybe "recession" is not an adequate description. We DO have a problem. A big problem. Like Willie Green, I think a lot of it has to do with government sucking investment money from producers.
Sorry to get off your main point.
You and I must not have lived through the same economy beginning with Gerald Ford and continuing through Carter until Reagan's tax cuts took effect. THAT was a bad economy.
If she is correct (which I don't concede), I still say the NBER is holding out in the face of too much good news. Yes, job growth hasn't picked up much, but it HAS picked up (about 1 million more people have jobs now vs. a year ago), so none of the factors that would drive the definition of a recession are in place today. I STILL say they're holding on to their "we're not sure" position for no good reason, except partisan reluctance to admit to any good economic news during a GOP administration.
I'll also speculate that the extensions of unemployment benefits have made the unemployment numbers sticky, meaning they aren't going down because a large percentage of the unemployed are either not looking for work or are being too selective (please don't take personally if that doesn't describe you).
So I'm branching out into architecture. I have been getting some work designing houses for a local architect using AutoCad. That, and my wife's job are paying the bills, barely.
Let me tell you guys (gals?) what it was like in the early 80's as a contract engineer in the electric power industry. I would get cold calls from prospective employers. Magazines and trade papers had page after page of help-wanted ads. Several times I was hired on the spot after a 5 minute telephone phone interview. The last job I got that way paid $40 per hour (in 1983). We would get travel pay, and per diem. No longer.
These days, a similar position (Power Plant Startup Engineer) pays less than $10 per hour. Think I'm kidding? Check out GE Power Systems Division's listings. "BSEE, 5 years of specific experience, willing to relocate, $20,000 per annum to start). Yeah, right...
America has entered the post-industrial era, where people who actually know how to design and build physical things are no longer needed. Symbol manipulators are the only people in demand these days.
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