Dude, Where's My Recession?

No recession, huh. Let's wait and see how the revisions come out and what the results are for Q2 and Q3. Then if we see numbers below zero, I expect to see you in sackcloth and ashes.

vin of CA 11:38PM July 03, 2008

There are people, myself included, who have refused to accept that we are in a recession because by definition we have not had two quarters of negative growth. But I'm ready to admit it. We are in a recession.

How deep in a hole do you have to be before you admit you're in one? President Bush has stated to the nation several times in the past few weeks that we are not in a recession. He refuses to say the “R” word. Me thinks that Bush doth protest too much – which points to recession. On the other hand, Warren Buffett, of Berkshire Hathaway, says we are in a recession. Buffett is willing to look at the facts on the ground and does not need the actual GDP report to show up on his desk. He certainly will not be waiting for two bad quarters before he acts.

Every time it appears that government officials, such as Bernanke, is about to admit that we are on the brink of, or actually now in, a recession, they back away. The most they will admit to is that it’s possible, or “we don’t have enough evidence at this time.”

The truth is the government treats recession as a pariah. They are afraid if they admit to it, people will panic. Where a recession is concerned, the public will stop spending and start saving (bad for the economy, according to Keynesian economics). Furthermore, the party in power does not want to admit to a recession and be blamed for it – or they lose the next election.

The truth is that the government is living in a fantasy world. They mistakenly believe the American people cannot handle the truth and that soothing words from the President and his aides will convince people that the administration has everything under control. They hope their persuasive abilities will counteract the actual evidence seen at the grocery store, the gas station, and housing signs saying “Reduced” and “Foreclosure.”

The American people are smarter than the leaders they elect and most of the economists out there. They don’t need to wait for the National Bureau of Economic Research to tell them that the US economy is in a recession. They are already pulling in their spending and looking forward to the rebate to help them pay bills. (Bush’s brand of Keynesian economics – the government gives out rebate to help public start spending again). You won’t see much of a rise in purchases of discretionary goods this time around.

Fred Jay of NC 1:47PM May 03, 2008

The real problem is not the natural cyclic ups and downs of the economy, it is using the cycle for political purposes. Maybe if the Republicans were true patriots they would willingly just give up power, so the righteous Democrats could take their just postions in both Congress and the White House.

That way they (the dems) could show us just how great Keynesian economics works and just how wonderful it would be to have a government intervening in every aspect of our lives.

We are always in danger by those who tells us the sky is falling. Eventually, something will come out of the sky which will prove their point.

William Barchers of HI 7:46PM May 02, 2008

As a middle class teacher, whose disposable income is dropping, I beg to differ with you. It always amazes me how those, like you, who are making a very good income (6 figures?) and are not personally fazed by the downturn can say “Recession? What recession?” I think that more than half of Americans, including myself, have been in a recession for several years.

Hang the GDP! That 0.6% number will be revised two to three more times in the next few months --- probably downward. Yet, if it remains above a negative number, you, others like you, and President Bush, will continue to tout that we are not in a recession. Americans making less than the median income ($50K/year) are hurting. Many have been borrowing aggressively over the past several years to keep up with the rising cost of living and are now in debt up to their eyeballs. (Not me – I don’t have any debt, except for a very, very low mortgage payment.) With credit tightening for mortgages and credit cards, borrowing is no longer an option for many lower-income households.

More bad news: Bankruptcy filings by U.S. consumers jumped 47.7 percent in April from one year ago. The manufacturing report showed a contraction for April. Construction spending dropped sharply in March, with housing activity plunging by the largest amount on record. Jobs have been shed for four straight months – and remember that the unemployment rate conveniently does not include those who have given up looking for a job.

Need I mention the price of gas/diesel and what it is doing to the trucking, farming industries and to the everyday American trying to get to and from work?

As the central bank cut its key funds rate in an attempt to boost the economy and stave off a recession, the cuts are also inflationary, leading investors to pour money into commodity futures as a hedge against the falling dollar. As a result, record high commodity prices are causing farmers to have to increase their prices. The Agriculture Department's chief economist told Congress Thursday that prices for corn and other food commodities will remain at 'historically high levels in coming years as the U.S. ethanol industry expands. This is causing American consumers (the whole world, actually) to face rising prices at the grocery store (look at the price of a gallon of milk – doubled in one year). The consequence is that food banks, who serve mainly the elderly and homeless, are being swamped with applicants who have jobs (according to Atlanta Community Food Bank Executive Director Bill Bolling). Millions of lower income people are literally having to decide whether to pay the doctor bill or to buy food, to pay the heating bill or to buy food.

With the overall economy growing at a mere 0.6 percent annual rate for the second quarter in a row, consumer spending advanced by only 1 percent. That was down sharply from the 2.9 percent gain for all of 2007 and the 3.1 percent gain for 2006. It was the weakest showing since 2001, the last time the economy was in a recession. Americans have cut back on a wide variety of discretionary purchases, conserving their cash for necessary spending. Look at Starbucks: second-quarter profit fell 28 percent as U.S. consumers responded to rising food and gas prices by making fewer latte runs.

Warren Buffet (my hero!) said on Monday that the U.S. economy is in a recession that will be longer and deeper than most people think. When Warren Buffet speaks, I listen. I am cutting my budget to the essentials – no going to the movies, no eating out, no Starbucks (never bought Starbucks, anyway), no vacation away from home – and continuing to save my pennies. I can only hope that the recession will soon make you feel the pain, too --- then maybe you will change your tune.

Mae Stephens of AL 5:51PM May 02, 2008