US Has Been In Recession Since December 2007

The National Bureau of Economic Research said Monday that the US has been in a recession since December 2007. The NBER is a private, nonprofit research organization of academic economists who determine business cycles. The stock market took a dip on the news that reached double-digit percentages for some tech stocks.

thank goodness slashdot covers this.

step aside intel 45 nanometer chipset, cloaking materials, telepathic controllers, and internet technology....its time for an economic recession story from the National Bureau of Economic Research.

you nerds can thank us later after you're done spending your way to patriotastic victory over the stock plunge and housing crisis.

Re:thank goodness slashdot covers this.

Actually, I think we need a "Why aren't there enough women in IT/games and what can we do?" story to make it a typical slashdot day.

Not a recession

Sure they are more accurate but they are mixing up precise esoteric terms with the 'generally understood' terms.

People understand what the general term means in terms of their daily lives and for them "recession" is bad. What started in 2007 it wasn't "bad" for the ordinary Joe - in fact a recovery might have occurred and we'd never have known about it. Now that it's the 2 quarters of negative growth thing, it's a real recession.

i thought the economy was bad enough

but when these economists start retroactively applying the recession to previous time periods, thats just cruel and unusual punishment

why do we tolerate these economists? why don't we just lock them in a dungeon somewhere? what did we ever do to them to make them hurt our economy so bad?

maybe if some of us form a posse and tar and feather some economists these jerks will relent and make the economy good again

Monkey Economics

Monkeying with the key metrics -- like "unemployment" (ignoring those no longer actively seeking work) and "cost of living" under continual "revision" for political purposes since at least 1983 (when "cost of living" replaced house prices with "imputed rent") -- has left us without the information we need to realistically address economic policy.

It's sort of like a junkie being asked diagnostic questions like "Where does it hurt?" by a doctor who is prescribing him opiates.

Not really a surprise.

Since the only growing industries seem to have been weapons and war, it's only natural that when you take the influence of government debt out of the picture, the economy has been shrinking for a long time.

There are some people who think you can replace economic growth in the private sector with economic growth in the public sector and it's the same thing. That may be true in Soviet Russia, but in the free world, pork financed with debt is an inflationary measure that doesn't increase the actual size of the economy.

What's worse, this 3.4% growth in the economy financed by debt is going to cause a cascade plunge. Right now we're like a family using debt to pay off debt (the growth in the national debt is equal to the money spent maintaining the current debt). What always happens in cases like these is the debt supply runs out, and the family goes bankrupt. If you think we're seeing hard times today, just wait. Paying back this 10 trillion is going to send the US back to the stone age by comparison.

Too much thinking going on here...

- "We don't believe we're going to have a recession though." [Vice President Dick Cheney, 1/30/08 [whitehouse.gov]]
- "I think the experts will tell you we're not in a recession." [President Bush, 2/10/08 [thinkprogress.org]]
- "The answer is, I don't think we are in a recession right now." [Council of Economic Advisers Chairman Edward Lazear, 2/11/08 [whitehouse.gov]]
- "First of all, we're not in a recession." [President Bush, 4/22/08 [thinkprogress.org]]
- "The data are pretty clear that we are not in a recession." [Council of Economic Advisers Chairman Edward Lazear, 5/7/08 [wsj.com]]
- "I don't think we are" in a recession. [Director of the National Economic Council Keith Hennesy, 6/3/08 [whitehouse.gov]]
- "I think we have avoided a recession." [White House Budget Director Jim Nussle, 7/31/08 [marketwatch.com]]
- "I don't think anybody could tell you right now if we're in a recession or not" [Dana Perino, 10/7/08 [thinkprogress.org]]

Recession? Meh.

I refuse to participate in any recession.

As long as I work and earn, I will save and spend just as I always did. My family's economy won't be dictated to by some namby-pamby report by a bunch of gloom and doom busybodies.

Seriously.

If you practice fiscal responsibility (something the U.S. government seems unwilling to do, hence the current mess), work hard and consistently, keep your skills updated and always marketable, you'll stay out of trouble... or at least be nimble enough to make whatever moves are necessary to get out of trouble very quickly.

Some folks want to wail and gnash their teeth at the falling sky. Hey, whatever floats their boat.

Predictions

The news media has accurately predicted 23 of the last 2 recessions.

Re:A few thoughts

The inflation adjusted debt accrual rate for the US government in the past 8 years has been about 380 billion dollars per year. This is equal to 3.4% of the total size of the economy.

Ignoring inflationary measures by the US government, the GDP has shrunk, not grown, for quite some time.

Re:A few thoughts

I personally don't like the idea of metrics you can substantially alter by simply borrowing a few hundred billion dollars from China.

There are some people who think you can replace economic growth in the private sector with economic growth in the public sector and it's the same thing. That may be true in Soviet Russia, but in the free world, pork financed with debt is an inflationary measure that doesn't increase the actual size of the economy.

My personal metrics don't really change. In my personal finances I don't pretend debt = income, I'm not about to let the federal government pretend the same.

Re:A few thoughts

The 'Rule of Thumb' definition aside, the NBER [yahoo.com] decides for itself when a recession occurs or not. James Joyner at OTB [outsidethebeltway.com] has a pretty good post on it. At best the GDP increase provides mixed signals, as the economy isn't doing great. I do agree that all the gloom and doom may be premature. (and could become self fulfilling.)

No matter how deluded, the poster has a point

The system as it existed worked on faith. Not facts. Faith that an industry that produces nothing and adds no value can be the most significant industry nonetheless and make EVERYTHING else secondary. It is not the first time.

During the internet bubble, real businesses that produced real goods that real people bought with real money were considered to be worthless. The future was in... well pets.com and what not. Pipe dreams, ad based revenue. It became hard for ordinary businesses to even find investment because they didn't promise the sky.

Of course, you can't say that the financial industry is much the same, that all these speculators add nothing, are fluff. But that is what happened, we had the financial industry fluffing itself up by selling itself its own products over and over again. This whole mortage reselling would be similar to Ford and Chrysler (apologies if they are the same) buying each others cars over and over and counting that as total production. The financial industry obtained a far larger share of the total market then it really is supposed to have. It worked because everyone believed it, believed that Wall Street really is important. It isn't.

Then it collapsed, people did indeed loose fate. Somewhere someone burst the bubble. What we got now is not so much a reccesion, as a re-appreasal. We now got to decide what exactly the role of the financial industry is supposed to be. Is it a service industry to the rest of the industry (exactly like say a cleaning company is a service industry) or is everyone else in the service of the financial industry.

Do we want banks to be just banks, lend our money to others for a profit that they partly keep and partly give to us or speculators, driving up prices, investing only in their own profit margins rather then investing long term in other industries.

A few economists, even as high up as the world bank are daring to question the system right now. That perhaps we should see the bank again as it once was, a service to society rather then the controller of the entire economy. No longer should the financial industry have a 40% share of the economy but rather something closer to 4%, back to REAL industry that actually produces value being the motor again, not shoveling money around.

Frankly I been watching the developments with great intrest. Right now I think a LOT of goverments are showing their true colors, bailing out banks that were never trustworthy, never played by the rules to help out the rich who put their money in their high risk accounts at the cost of the working mans taxes.

Re:No matter how deluded, the poster has a point

The other thing is, even the "real" production is useless crap that has designed obsolescence.

They talk on the news about how holiday spending is going to be low and how much its going to hurt the economy. Do we really want an economy based on the sales of what amounts to Christmas toys?

Did you know that when the Core Inflation rate is calculated they disregard things like milk, bread and fuel? You know the stuff that people...need.

Re:No matter how deluded, the poster has a point

Of course, you can't say that the financial industry is much the same, that all these speculators add nothing, are fluff. But that is what happened, we had the financial industry fluffing itself up by selling itself its own products over and over again. This whole mortage reselling would be similar to Ford and Chrysler (apologies if they are the same) buying each others cars over and over and counting that as total production. The financial industry obtained a far larger share of the total market then it really is supposed to have. It worked because everyone believed it, believed that Wall Street really is important. It isn't.

Then it collapsed, people did indeed loose fate. Somewhere someone burst the bubble. What we got now is not so much a reccesion, as a re-appreasal. We now got to decide what exactly the role of the financial industry is supposed to be. Is it a service industry to the rest of the industry (exactly like say a cleaning company is a service industry) or is everyone else in the service of the financial industry.

It is a mistake to assume that the current financial clusterfuck is because of bad mortgages or a bubble burst (we didn't have any serious issues with the Dot Com bubble). The bad mortgages are nothing but the trigger to two serious underlying problems:

(1) Most people in western countries live beyond their means.
(2) But most importantly: Credit Default Swaps.

The current financial situation is due mostly to [banks/investment firms/everyone and their dogs] betting on the failure of different entities. This is all due because of Credit Default Swaps are totally unregulated and they are a speculator's wet dream. The current house of CDS cards of about 50+ trillion $ (yes, trillion) is crumbling. First wave was MBIA and other bond insurers being downgraded by rating firms. This immediately triggered a metric fuckton of CDS collateral calls. Bear Stearns and Merill go under (well, saved last minute). Freddie and Fannie get bailed out, this immediately calls for another round of collateral calls. This second wave caused the collapse of Lehman, the nationalization of AIG and the massive cash infusion into Citi. If either big auto makers goes down, prepare for the worse. Oh and Goldman Sachs has started to write down bad assets too, no bank is safe.

This all thanks to speculators betting on companies with their unregulated toys: the Credit Default Swaps. It has nothing to do with believing or not in a system or losing faith in Wall Street. It's all about making a bunch of really bad bets without having cash on hand to cover the losses. And now that the bets are lost, it's time to pay. But t here is no money ...

Re:No matter how deluded, the poster has a point

Gold only has the value that other people think it has.

While that is true, the real argument for the gold standard is its fairly constant and predictably increasing supply. All the gold that will ever exist on earth is already here, and we find a little more every year. The main difference is that the government can't just make more gold when politically expedient, like they can with paper money. However, that's also its largest negative according to most economists. The current bailouts would be impossible with gold coins.

Re:A few thoughts

As soon as Obama takes office, prepare for the heralds to sing: The recession is over! We are winning in Iraq! Global warming has reversed!

Obam-ho-tep.... Obam-ho-tep.... Obam-ho-tep.... Obam-ho-tep.... Obam-ho-tep....

Re:A few thoughts

(half my retirement funds are now gone).

Like most things in your post thats wrong. Stop believing in the Obama campaign as the source of all your financial info. The correct statements would be pick one:

My retirement fund is now worth half what it was

This recession has actually caused my retirement fund to shrink

Or my personal fave:
What the hell ! You mean we can't buy big houses, SUV's and rack up credit debt endlessly ?!?! What do you mean we have to 'compete' for jobs ? Whats this crap ?? Dont choo kno I'm an American !!!

Its time to sort the wheat from the chaff. Man the fuck up. (and spread that to your friends, and their parents too - the great depression was FAR FAR FAR worse than this and they were not whining as much as people now either.)

Re:A few thoughts

You haven't actually lost anything until you decide to sell at the lower value. The market will come back, it always does.

That's great, unless I'm 65 and expected to live on the money I get from selling my house, moving to an apartment, and liquidating my investments. The stock market, had I got in 10 years ago and invested in a safe S&P 500 index fund, has done absolutely nothing. Zero return in ten years. Ten years is pretty close to "long term" in my book.

"day traders" are responsible for all the major flux in the markets, and at all times. they should be put to the wall

Day traders are responsible for the unprecedented and unequaled liquidity in the US stock markets. They are the reason you can *always* sell or buy a stock. AIG and other bailout recipients have problems because they held onto assets, like CDS, that now are completely illiquid. They can't sell at any price. What they need is a CDS market filled with day traders who are willing to speculate on those assets and are willing to buy them at *some* price. Without speculating day traders, there is no market for you "long term" investors.

Re:A few thoughts

Why, then, did President Bush sign H.R. 5140, the Economic Stimulus Act of 2008 on February 13?

Because there are lot of other indicators that you might be heading for a recession -- like decreasing growth, for example.

But the definition of a recession is two quarters of negative growth, which we haven't had yet. By another definition, we haven't even had a declaration of being in a recession by one of the bodies that makes such declarations until yesterday.

So then why have we heard constant talk about how the US is in a recession for over a year now?

Answer: political opportunism, plain and simple. If you can make people believe we're in a recession and that the party of the current president caused it, in the midst of a presidential campaign, that bodes very well for the opposing party.

No matter your politics, you should consider that incredibly irresponsible. Aside from very real economic issues, we've also had nothing but recession...recession...RECESSION -- with the implication being that it's Bush's fault, and sometimes that being explicitly stated, depending on the pundit at hand -- hammered into our collective heads for nearly the entire campaign cycle.

When McCain said, "The fundamentals of our economy are strong," (emphasis mine) he was -- and still is -- 100% correct.

Unfortunately, it was better for some liberals to push the idea of a recession, which will now end up becoming a self-fulfilling prophesy. How long do you have to hear things are terrible before you believe they are, and start making changes in your own life? And then start feeling the effects of millions of other people making those changes, and people losing jobs, and businesses closing, and this vicious cycle causing a downward spiral?

Disclaimer:

1. I didn't vote for Bush.

2. I voted for Obama.

So assuming I'm a die-hard Republican because I'm saying something you likely disagree with isn't going to work.

Re:The Magic 8 ball told me that a long time ago

"They" have known the economy was in trouble for at LEAST a year and likely longer. But they knew one thing for sure -- if they announced or reported it as such, the economy's floor would have dropped out. So instead, the news and other outlets have been dropping hints and skirting the big picture by talking about failing elements of the economy hoping everyone will start to form their own conclusions. And every time the word recession was asked far beyond a year ago, the only answer was "not yet" and they kept hoping things would get better.

The Bush economic stimulus package worked to some degree. Many people horded it -- stuck it in the bank. Other people paid bills with it. But the over-all result was measurably positive... and the government did not commit trillions to making that effect. If that notorious $700bn were committed in the same way, we would see a HUGE rebound in the economy... instead, the money is given to banks to encourage them to do things they are unwilling to do... and what's worse, the government isn't getting the money back!

Re:The Magic 8 ball told me that a long time ago

"They" have known the economy was in trouble for at LEAST a year and likely longer. But they knew one thing for sure -- if they announced or reported it as such, the economy's floor would have dropped out. So instead, the news and other outlets have been dropping hints and skirting the big picture by talking about failing elements of the economy hoping everyone will start to form their own conclusions. And every time the word recession was asked far beyond a year ago, the only answer was "not yet" and they kept hoping things would get better.

The Bush economic stimulus package worked to some degree. ...

Huh? The April hand-out? As far as I've heard, it had almost no effect at all.

(it was too small and too untargeted to have any significant effect on the economy-- it essentially was a very small tax cut, primarily at the lower income levels. Might have prevented one or two bankrupcies, if it happened to hit somebody right on the razor's edge, but wasn't enough to save anybody's house.)

Re:The Magic 8 ball told me that a long time ago

This year, like the previous year, and the year before that, I will definitely NOT shop my ass off for Christmas, nor will I stuff my face silly on Christmas, only to feel bloated the next day and have to diet so I can stomach New Year's eve binge (which, in case you didn't guess, I never do either).

Christmas, like Halloween, father/mother/grandma/grandpa days, are commercial inventions, fake joy and fake happiness destined to make you shell out your hard-earned money and, since the great Bank Robbery^H^H^H^Hbailout plan, supposedly help the economy recover.

Well, I paid my loans, I don't live on credit, I spend my money cautiously, even when there's no "crisis", so I fail to see why I must buy Christmas junk to support those who don't.

Re:The Magic 8 ball told me that a long time ago

Well, I paid my loans, I don't live on credit, I spend my money cautiously, even when there's no "crisis"

You, sir, are a sucker.

Re:Umm, rational markets?

What's good for a person and what's "good for the economy" are often completely at odds.

According to politicians, the patriot will be completely overextended with debt, barely making all his or her payments, one paycheque away from oblivion.

According to common sense, the non-idiot will try to have as little debt as possible, using it only for major capital expenses rather than trying to live off of it.

According to politicians, the patriot will spend every penny, so the money he or she makes will have maximum exposure to the economy.

According to common sense, the non-idiot will try to have savings, so if something happens they can just coast on savings until the crisis is averted.(Politicians hate that idea. How can they pander to people who aren't on the verge of collapse?)

According to politicians, the patriot will buy a new laptop, car, and house TODAY using credit. They don't have to pay until 2011 anyway, so DO IT! DO IT NOW!

According to common sense, buying things with cash will save considerable amounts of money. First, the interest accrued on debt never takes place. Second, the fees involved with taking out debt never take place. Third, it's easier to get deals and bargain with cash in hand resulting in lower prices.

The rational actor is unpatriotic. Their actions are contrary to maximizing economic growth in the short term.

On the other hand, my personal belief and experience is that debt works differently than economists think. It increases the volatility in the economy. Individual actors add massive amounts of money to the economy, but are suddenly extremely limited in their ability to participate in the economy.

Consider two people: A person with debt, and a person without debt.

The person with debt adds 10k to the economy by buying a new Toyota Yaris. The economy recieves his 10k. For the next year, as he pays back the debt, his ability to participate in the economy is reduced by $900/month, and he is effectively locked out of making any further contribution to the economy. The economy spikes in Q1, but is minimal in Q2, Q3, Q4.

The person without debt doesn't buy that car, but is capable of spending $900/month on the economy. Economic output is constant in Q1, Q2, Q3, Q4.

Now think about this: Many people have 50 year, $500,000 mortgages as a result of the housing bubble. With the economic spike done and over with, what remains?