Wednesday, June 25, 2008

Apparently we are in a recession

This was one of the big headlines in the LA Times' Business section today:

Chapman University forecasters say U.S. is in recession

Here's the opening paragraph:
As housing prices continue to tumble in most regions, forecasters from Chapman
University said Tuesday that the U.S. economy had fallen into a recession that wouldn't ease until next year.

In other groundbreaking, earth-shattering news, the grass is green, the sky is blue, eating too much junk food can make you fat, and bowling balls hurt when you drop them on your foot. Also, Cameron Diaz is beautiful, Meryl Streep is a great actress, and Steven Spielberg is a famous director. More profound and deeply meaningful insights tomorrow.

Is there really any doubt about this?

I realize that there is a technical definition of "recession;" which is two quarters of negative growth. But using that definition means that you can't definitively say whether or not you're in a recession until it's already well under way. That's like saying a married couple shouldn't decide whether or not they are still in love until after they are divorced.

But let's see: the housing market is crashing like no one has ever seen, gas prices are skyrocketing, car sales are dropping through the floor, unemployment is up, the stock market isn't moving, and lots of people are worried about their jobs. Other than that, we're not sure we're in a recession.

Normally I am obsessive about maintaining high standards of intellectual discipline when discussing socioeconomic issues. But there are strong emotional and political components of this as well as strictly defined economic criteria. We are going to need strong political leadership to get out of this, and arguing about whether or not we are in a recession fudges the issue. Which, in all fairness, the LA Times is not doing - they are not debating the issue, and they are certainly not fudging anything. Hopefully, they are helping to end any debate.

I think it's safe to say, at this point, that we are in a recession.

No comments: