Well we have to still go by the official definition of a recession and the problem is a recession cannot be called until after the fact. Last Quarter saw still + growth so it is technically impossible to say we are in a recession yet. But people on TV like to use the R word I guess cause it sells. As we all know economic calls of cycle tops or bottoms are always late because you need to see a string of data before saying so and by the time all that data come out you are already up to your waist.
The Fed also acts to soften the landing of upcoming economic slowdown or stay ahead if it can since rate cut effects lag a bit. So you cannot say the Fed would not bother to lower rates if we were not in a recession. A recession is a decline in GDP for two or more consecutive quarters. We have not had that happen yet so by definition we are not in a recession. Economic slowdown is not a recession if we are still growing but the rate of growth has slowed. Just like a housing market in a particular city (like mine in D.C.) has not crashed simply because the growth has slowed, but it is still growing.
Agreed. It's amazing how many "kids" here on ET do not actually know the definition of a Recession. Anyone ever take Econ. 1 here? Recession is not here as of yet. But the Philly Fed Index today was at -21, almost unheard of.
It's amazing how many "old guys" here on ET that think they know the definition of recession when clearly every economic definition on the web proves them wrong. http://www.google.com/search?source...GGIC,GGIC:2006-50,GGIC:en&q=define:+recession A mild decline in stock prices, business activity and employment for two consecutive quarters (six months). technically defined as at least two consecutive quarters when the economy shrinks or fails to grow. A contraction in National production that lasts six months or longer. A recession might be marked by job layoffs and high unemployment, stagnant wages, reductions in retail sales and slowing of housing and car markets. two consecutive quarters of a year during which GDP falls ETC, ETC, ETC.......
I took econ 1 and 2 bud. The school of economics sent me a letter asking me to consider it for a major. I passed. You stick to the text book definitions. I'll stick to the reality of what I see. Text book definitions is why the fed is never preemptive in preventing recession.
All of those defintions confirm that current activity indicates the potential we are heading into a recession, not that one exists right now. The definitions need to be qualified really because if we grow 10% on quarter and then 9% and 7% the next two quarters we are not in a recession although some definitions would define it as such. The recent GDP data is as such: "Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 4.9 percent in the third quarter of 2007, according to final estimates released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 3.8 percent." So the real question is where will GDP come in at for 4th quarter of 2007 and 1st Quarter of 2008. Most estimates for 4th quarter are lower than the 3rd quarter although still positive. Certainly a contraction in the 4th quarter, but not yet a recession. I think some can guess that we are heading into a recession but based on all these definitions that are quoted and the actual data, whether we are really in one is premature to call.
Q4 will be lower than 3, and Q1 will be lower than 4. Looking at all the data sets coming out is enough evidence that we are in a recession now and will be qualified when the Q1 # comes out in April. It is a traders job to use the evidence to come to a conclusion now, not in the future. Besides, my magic 8-ball said this when I asked about where we are headed: