"Emancipate yourself from mental slavery, none but ourselves can free our mind.” - Bob Marley

Thursday, September 18, 2008

For All You Recession Denialists

Courtesy of Calculated Risk, I got yer great economy, "imaginary" recession right here:

(click for larger version)

3 comments:

OBloodyHell said...

OK, two things:

1) Citing unemployment claims which have been openly acked as having jumped specifically due to asset destruction caused by an incident of severe weather is disingenuous in itself. "Ike made the spike"... LOL. It's not as though the continued rise could be specifically attributed to an economic slowdown.

2) Unemployment does speak to "discomfort level" among people, but it is not and has never been a factor in the description of a "recession", which is simply defined -- two successive quarters of negative GDP growth. Considering that we've only had one of those, and just barely, and a subsequent quarter of positive, if sluggish, growth, it once more says "NO, NOT A RECESSION -- YET". Fairly screams it, as a matter of fact.

And the objection I have is that when you scream recession, endlessly and loudly, you substantially increase the negativity about the economy in the general public. This, in itself, has a lot to do with producing a recession, at least part of which has often got a lot to do with public perception and attitude. It's not the primary driving force, but it damned sure contributes to both the length and depth of one.

So claiming it falsely is a PARTICULARLY VERY BAD THING

>:-/

I think, with the stuff happening on Wall Street, that the chances of an actual recession have, indeed, gone up substantially -- But the reality is that we don't have one yet and pessimism certainly does not help. Blind optimism is not called for, but crying Absolute Doom and Gloom over unemployment statistics that any western European nation would give its eyeteeth for is just wrongheaded.

It begs for things to not only get bad, but to get a lot worse and for longer than they need to be. There's a lot of good things in the economy, if you go looking for them. And those things can balance out a lot of the bad news.

But you have to go looking, because you can't depend on an MSM which is out to do everything possible to sell Obama to the damnfools out there by painting the economy as horrible and just short of The Great Depression, when, in reality, its current state is merely middlin' and sluggish.

.

bobn said...

Hi, OBH.

From the linked article: "In the week ending Sept. 13" - Ike made landfall on the 12th or 13th. I don't think the refugees were all standing in line at the department of employment insurance. Also, note, again from TFA, that red line is a 4 week rolling average.

Nice try, though.

As for the discomfort level, these are real people making real claims - not the GDP numbers that are so laughably cooked that they are useless. Read the paper here on how the CPI has been comprpomised. Or watch the video on "Fuzzy Numbers" here
Note that the whole "Crash Course" is excellent.)

Regarding the GDP, see here ,we see:

At one time, the NBER did define a recession as two consecutive quarters of negative GNP/GDP growth that were not distorted by an event such as a truckers' strike.[4] The NBER used trends in indicators such as industrial production and payroll employment to time a recession's beginning and end, to the month. More recently, though, the NBER has abandoned the GDP as a recession indicator and has relied instead on those other economic series.


Also, perhaps more importantly, from the NBER itself:

The NBER does not define a recession in terms of two consecutive quarters of decline in real GDP. Rather, a recession is a significant decline in economic 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.

Further from NBER here:

It's more accurate to say that a recession-the way we use the word-is a period of diminishing activity rather than diminished activity. We identify a month when the economy reached a peak of activity and a later month when the economy reached a trough. The time in between is a recession, a period when the economy is contracting.

They haven't declared the peak yet, because the darned government numbers get revised so heavily as time goes by, but it's pretty clear that things started sucking when the securitization and Commercial Paper markets froze up in August 2007.

See Michael Shedlock (aka Mish) here discussing this further. You should like Mish - he's for abolishing the Fed, abolishing the SEC and abolishing fractional reserve lending and letting free markets work.

And the objection I have is that when you scream recession, endlessly and loudly, you substantially increase the negativity about the economy in the general public.

Yes, we're only having a "mental recession", right? I'll agree that there is a significant slowing of activity in Phil Gramm's head, but that's the only mental recession - the one everybody else is talking about is here and it is very real. This "if we don't talk about it, it won't be so bad" is mostly crap - unless you want the government to just stop issuionng statistics at all and you want to censor all business news sources.

But guess what? People - just ordinary people - have this funny way of noticing when more and more of their friends are partly or wholly unemployed and when the price of f'ing everything is rapidly going up.

I think, with the stuff happening on Wall Street, that the chances of an actual recession have, indeed, gone up substantially

I've been watching the shenanigans on Wall Street and D.C. for more than a year. My best case scenario: a long severe recession that has already started.

Gloom over unemployment statistics that any western European nation would give its eyeteeth for is just wrongheaded.

The graph shown is for the American economy.

But you have to go looking, because you can't depend on an MSM

As noted, I've been following this in the blogoshere for 1+ years. Agreed, MSM is out of touch. But until recently, they were far too optimistic, buying the government BS that this wasn't an issue, then that it was only an issue with subprime, then that it was contained. The blogosphere I inhabit has seen serious trouble coming for a long time - the credit/housing bubble was always going to end badly, and some in 2004 or 2005 saw this coming. I'm just sorry i didn't get there a year earlier than I did.

OBloodyhell said...

I'm responding in the "new" recession thread that is a couple days newer than this.

About Me

I'm a 57 year old geek. I voted Democratic for 20 years, because I disliked the Republicans more. But now, nobody really speaks for me. I'm for Guns, for more correct government regulation of the financial world, against illegal immigration and amnesty. (in 2008 I ended up voting Republican - too many questions about Obama, and voting against anybody who voted for TARP 1.) In 2010 I voted a stright republican ticket because the Democrats have completely lost their minds.