All year long, throughout an interminable political campaign season, the debate kept popping up:  “are we in a recession?” Defenders of the Bush regime insisted “no”; critics looked at the economy outside their windows and said “yes, of course”; waffling purveyors of conventional wisdom pointed to arbitrary standards about consecutive quarters of GDP shrinkage.

Well, today it was made official—at least as official as any such thing can be. I’m not quite sure when or why everyone decided to defer to the National Bureau of Economic Research as the official arbiter of these things, but certainly everyone in the conventional media treated this like it was Breaking News, and damn sure the stock market reacted as if it was. Nothing has actually changed, but the announcement matters because everyone says it matters. (Thus demonstrating yet again the very sort of manic-depressive groupthink that created this mess in the first place.)

So, we’ve been in a recession for a year now. That means it’s already one of the longest ones on the books, and there’s reportedly “no end in sight.”

Everyone who’s seriously surprised by this, please raise your hands… 🙄

New question for debate: is it a depression? And who gets to make that official declaration? Because apparently all the disappearing jobs, multiplying foreclosures, collapsing industries, frozen credit markets, evaporating retirements, and so forth just aren’t quite enough to make it that serious yet…

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4 Responses to “So it’s a recession”
  1. My continuing advice re: Canadian news is to keep cbc.ca/news/ bookmarked along with at least a dozen other sources across the spectrum, from the National Post to rabble.ca.

    As for the rest…well, Phil’s right. Blaming the current President-elect for getting the world into this mess will never be “on”.

  2. phil from new york says:

    Glad to see you writing about the NBER. Usually they get ignored by all but the most nerdy economic types.

    The handful of economists who constitute the business cycle dating committee that calls recessions wasn’t issuing some profound statement as though they expected people to be shocked that we’re in a recession. They’re merely dating the turn in the business cycle — in this case the peak. And they look at a broader range of data than just GDP. In declaring last December the onset of the recession, they are essentially confirming what most of us have believed anyway — that we’ve been in the recession for some time. But now we have an official date of the start of the downturn.

    I think they are considered the official arbiter because they are non-partisan and they take an academic’s reasoned view about recessions. They try to take the emotion and the politics out of making such a declaration.

    Why the stock market and the news media went nuts is beyond me. Usually the NBER’s declaration of the beginning of a recession merits a brief in the business section because everybody already knows we’re in one. The market may have been looking for a good reason to go down after having gone up last week. (Today, it was back up.) Also, the fact that the NBER dated the beginning of the recession to last December might have shocked some people because that means this recession has already lasted longer than the last two — and as you note, we’ve still got a long way to go to get out of this one.

    One salient political fact did come out of their declaration. This recession clearly — and officially — began under Bush and the Republican regime. No escaping that now. So while Obama may be blamed if he doesn’t get us out of the recession, he can’t be blamed by Republicans six months from now for getting us into it.

    As to what constitutes a depression, I’ll have to check that out. It’s a sad commentary on our times that until now in my 40 years or so of following the economy, I haven’t had to worry about identifying when a recession becomes a depression.

  3. Well, of course nobody wants it. Doesn’t mean it’s not happening, though.

    (Interesting — and promising — news from Canada, BTW… I’m amazed that I haven’t heard or seen any coverage of it down here. Sounds like Harper may have met his match!…)

  4. Hoping that it’s not so, Chris. Granted, comics – for one example – seem to have had their roots in the last one, and might yet be able to thrive financially as an entertainment sub-industry in another one…but I don’t know that we want the fallout for everyone else that’s going to come of such a thing if it’s happening again.

    Meantime, we may be seeing the first coalition government in Canadian history in ninety years…

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