Congratulations! Its a Recession!

It doesn’t take too much advanced mathematics to note that by several historical methods for determining whether the economy is contracting or expanding, we are now in a recession.

Consider a true inflation measure of GDP, per capita measure, or the NBER methodology. All three show economic contraction.

Let’s start with our "Reality-based" analysis:

Oecdinflation_cs_20080429112556The only conclusion an honest read of inflation produces is that both Q4 2007 and Q1 2008 were positive in nominal terms, but negative in Real terms. Remember, the goal of GDP should be to figure out how much the economy is expanding or contracting — not how much prices rose.

By any honest measure of inflation — and not the 3.5% BEA price index for gross domestic purchases — both of the past two quarters would have been negative. How can we have an understated inflation rate of 4%, and a GDP Price Deflator of just 2.6%?

2) The NBER methodology: The 2 consecutive quarters of GDP contraction is not the only metric for identifying recessions. According to the econo-geeks at the National Bureau of Economic Research, a recession is defined as a "significant decline in economic activity spread across the economy, lasting more than a few months."

Here’s their specific language:

"Most of the recessions identified by our procedures do consist of two or more
quarters of declining real GDP, but not all of them. Our procedure differs from
the two-quarter rule in a number of ways. First, we consider the depth as well
as the duration of the decline in economic activity. Recall that our definition
includes the phrase, "a significant decline in economic activity." Second, we
use a broader array of indicators than just real GDP. One reason for this is
that the GDP data are subject to considerable revision. Third, we use monthly
indicators to arrive at a monthly chronology." 

Hence, if we follow what the people who actually determine what is and isn’t a recession say abnout the matter, and not just limit our analysis to  GDP, then its pretty clear we are now experiencing an economic
contraction.

Rex Nutting reminds us that 1) After-tax inflation adjusted incomes have been
stagnant since September; inflation-adjusted sales have fallen at a 5.2% annual pace in the past
three months, and are essentially unchanged from six months ago; industrial output has stalled;

UPDATE: Rex adds that spending on services rose 3.4%, including a 14% rise in real spending (seasonally adjusted) on household heating. It’s quite likely that this figure doesn’t accurately adjust for the rising cost of natural gas and heating oil this year. About one-third of the total increase in GDP ($17.4 billion) was an increase in the spending on heating costs ($5.5 billion). Hence, even more Inflation-driven GDP.

By any reasonable measure of the NBER delineated metrics, we are already in a recession.

3) Per Capita Measure, favored by Merrill Lynch North American Chief Economist David Rosenberg, is to simply look to see if the economy is expanding faster than the population. With the US population expanding by 1.0 – 1.5% per year, it takes economic growth of at least that merely to stay in place.  Hence, Rosenberg’s claim that GDP growth on a per capita basis is actually are contracting sine Q4 2007.

 

Previously:
Merrill Lynch: Per Capita Recession Began in Q4 (April 2008)  http://bigpicture.typepad.com/comments/2008/04/merrill-lynch-p.html

GDP, Inflation & Recession   
http://bigpicture.typepad.com/comments/2008/04/gdp-inflation-r.html


Sources:
GROSS DOMESTIC PRODUCT: FIRST QUARTER 2008 (ADVANCE)
APRIL 30, 2008
http://www.bea.gov/newsreleases/national/gdp/2008/pdf/gdp108a.pdf

Business Cycle Dating Committee, National Bureau of Economic Research
NBER, January 7, 2008
http://www.nber.org/cycles/jan08bcdc_memo.html

Global Inflation Continues to Accelerate
Phil Izzo
Economics Blog, April 29, 2008, 11:30 am
http://blogs.wsj.com/economics/2008/04/29/global-inflation-continues-to-accelerate/

U.S. could have recession without drop in GDP
Analysis: Growth isn’t everything; jobs and incomes count more
Rex Nutting
MarketWatch, 8:50 a.m. EDT April 30, 2008
http://tinyurl.com/4cab83

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What's been said:

Discussions found on the web:
  1. Donny commented on Apr 30

    Come on Barry … this ain’t no recession!

    Since we now know that no recession is in the cards, and this “economic slowdown” was V shaped, and we’re already growing again in April, The Fed can now stop ignoring one of its primary functions of Price Stability. Heck, The Fed can take back all those rate cuts, and raise rates 350 bps this morning. Right?

    The Fed better stop worrying about Wall Street, and start focusing on Main Street … otherwise the villagers will start gathering with pitchforks and torches soon. And yes, I’m the Bozo now paying a C-Note to fill up my X5 in SoCal!

    BTW, Am I the only one that is still shocked that the Fed signed on to the $10 Bear Stearns deal? WTF! Wall Street pushed and they got what they wanted. And now the deal is back stopped by the tax payer. Fu*K This!

  2. Michael Donnelly commented on Apr 30

    Both durable and non durable spending was negative this quarter. That only happens during recessions.

    Thought the housing bubble was bad? Welcome to the business construction bubble. Nonres structures over the past 4 quarters, up 26%, 16%, 12% and now -6%, that’s a pattern.

    But don’t worry exports will save us. Up 19%, 6.5%, and now 5.5%. Is this a negative sloped pattern?

    Lastly GDP activity is up 0.29% over the last 6 months slowest since… yep the middle of the 2001 recession.

  3. Kirzner commented on Apr 30

    Yet strangely Mr. Donnelly, spending on services was up. This was mainly due to Housing Services (and partially due to spending on electricity and medical care, both largely driven by prices). I’m not sure what housing services actually entails, but it doesn’t make any sense that it can have increased only slightly less than its average since 2006.

  4. Ross commented on Apr 30

    This ecomomy reminds me of the C-NBC peacock……….QUACK

  5. Mephisto commented on Apr 30

    Could Barry directly refute Brian Wesbury…mano-a-mano. Brian is confident this is no recession and doesn’t think it will become one. I don’t believe him, but he has held this view since the beginning and he “called” the last recession.

    I thought he would throw in the towel when employment went negative, but he didn’t. Is it just a matter of time, or is he on to something?

  6. nick gogerty commented on Apr 30

    the price deflator recieves a lot less attention than it should. I would be interested to learn more about its validity. The CPI gets more than its share of attention.

  7. John Williams commented on Apr 30

    Gross Domestic Income Contracted 1.0% in the Fourth Quarter. Gross Domestic Income (GDI) is the income-side equivalent to the GDP’s consumption-side measure. As in double-entry bookkeeping, both sides should equal each other, with both measures showing the same rates of growth.

    Such rarely is the case, however, and sometimes the pattern of differences between the two series is suggestive of more than simple reporting inconsistencies. The differences between the two series are resolved mathematically by adding a statistical discrepancy account to the income side, and the discrepancies have been soaring.

    The amount of discrepancy (not adjusted for inflation) moved from a negative $40.8 billion in Q2 2007, to a positive $84.8 in the third quarter, to a positive $139.9 billion in the fourth quarter.

    The positive discrepancy means that GDP is being overstated relative to GDI. As a result, where third- and fourth-quarter real (inflation-adjusted) growth rates were 4.9% and 0.6% for the GDP, the GDI saw a growth rate of just 1.2% in the third quarter and a contraction of 1.0% in the fourth quarter. Both sets of numbers are supposed be legitimate, but the GDI is showing the economy already to be in contraction. The details here will be updated in a month or two, when the first-quarter GDI is released.

  8. VennData commented on Apr 30

    If the deficit is in the $400-500B range (if you included the off-budget Iraq, Afghanistan, Katrina, etc it’s more – the y-o-y increase in Federal government debt is $200-300B more totally $500-700B easily)

    …then Federal government deficit spending equals roughly 2-4% of GDP which means the entire Bush year’s “growth” in GDP can be chalked up to their wild-eyed government spending.

    …fiscally conservative my asshat.

  9. Andy Tabbo commented on Apr 30

    Congratulations, You missed a 10% run in equity prices in six weeks by actually believing that current negative stories would have any affect on the stock prices.

    Some of you may have even lost money shorting the market into unsustainable anxiety, panic and negativity. I like this blog, but every story posted here has been unanimously bearish. The BP also managed to top tick the Euro with the funny cartoon of the Euro giving it to the dollar.

    So, don’t let this blog be your sole source of viewpoints and info.

    This market will continue to chop and grind higher as we get the weak shorts out. -AT

    ~~~

    BR: Who missed it?

    Two months ago, I said on January 23rd, you could buy stocks for an 8, 10, 12% rally. That has now come to pass —

    But what does that have to do with the state of the economy?

  10. Ross commented on Apr 30

    Andy,
    Who missed what over the last 6 weeks? I didn’t and a lot of people here took advantage of an oversold bounce. It may well continue.

    I don’t view this blog as being perma-bearish. We are all big boys here.

    Trade em if you got em..

  11. DL commented on Apr 30

    “By any honest measure of inflation … … both of the past two quarters would have been negative. How can we have an understated inflation rate of 4%, and a GDP Price Deflator of just 2.6%?”

    A related issue concerns the determination of real GDP using the price deflator. The formula is as follows:

    Real GDP = 100 X (nominal GDP/price deflator)

    What this equation says is that, no matter how large the GDP price deflator might be, a positive nominal GDP can NEVER give rise to a negative real GDP. I’m not an economist, but this makes no sense to me at all. If nominal GDP is small (e.g., 0.5%), it could very be the case that REAL GDP is negative. But the equation above would preclude that conclusion from being reached.

    So I would question whether “real” GDP can actually be achieved using the equation above.

  12. Vermont Trader commented on Apr 30

    I think the BR’s current trading call is a bear market bounce to SP500 1400 or so.

    Not 100% sure though, he hasn’t reiterated it in a while.

  13. colin commented on Apr 30

    DL,

    Real GDP can never actually be negative, you are mixing up growth of real GDP and the figure itself. The ‘negative real GDP’ you refer to is GDP growth. The equation is for GDP itself.

    When it comes down to it, the argument of whether or not we are in a recession really revolves around 2 pieces, the deflater and population adjustment. If economists and pundits disagree on these two, than both sides (the bulls and bears) can simply stand by their arguments and point to their assumptions leading to their conclusions. Really in the end, whether or not we are in a recession is unimportant.

    For me, the length of the recession/mild growth is the only issue. And I don’t think Ben has been doing much to ease my concerns there.

  14. UrbanDigs commented on Apr 30

    Yes, I also believe Barry’s trading call was for a bear market bounce, saying that ‘downturns do not go in a straight line’, or something that effect to back up the bounce call.

  15. Andy Tabbo commented on Apr 30

    Ross,

    Good for you. I’m not saying the readers and posters of this blog are perma-bearish. I’m just saying that every story on this blog in the last several weeks has been uniformly bearish.

    Also, if you believe that the current stories you read and hear are predictive of future market movements, then you’re deluding yourself. So take this fine blog for what it is…the viewpoint of one person who is posting information that comports with his view.

    And remember, the “news” always follows the “trend.”

    ~~~

    BR: Andy, there is a Google search box upper right hand side

    Here’s a quote from April 1:

    “Thus, we do not want to maintain short positions for the next few weeks, as we believe this rally is a classic bear market bounce, and it presents a selling opportunity later this month.”

  16. The Financial Philosopher commented on Apr 30

    I am certainly no economist so perhaps someone can help me here…

    It seems that close analysis of macro-economics and debunking Government reports is searching for reality where reality is not a primary factor with investment decisions. It seems a bit rational to seek “the truth” when the investor herd is more irrational, especially in times of uncertainty.

    Perception is reality. I imagine the American consumer will decide our ultimate fate. They will spend when perception is positive and spend less when perception is negative.

    If we can actually determine “the truth” and reveal that we are or are not, in fact, in a recession, then what does one do with the information?

    Are investment decisions any different?

    Are we judging which is the prettiest girl or are we judging which is the girl the judges think is the prettiest?

  17. Anthony commented on Apr 30

    Okay, we’re in a recession. So what can we do now? What should the Fed do?

    If they were to officially announce the biggest recession ever since the great depression, how would it affect the economy?

    Is there really NO possibility of the USA not being in a recession and is only in a V-shaped slowdown like Donny said??

  18. Michael Donnelly commented on Apr 30

    Kirzner,

    Are you suggesting folks should do their patriotic duty and freeze to death?

    Household operation expeditures were up 7% in the first quarter. (nominal was up 11%) That includes heating the home.

    Folks were able to stop driving so much (a little) Household transportation was down only 2.1%, prior quarter was 2.8%. But the actual out of pocket was monster up 7%.

    So if to heat your home you had to shell out 11% more, and to drive you had to shell out 7% more. That’s a good thing???

    No, no, no. Households were forced to cut spending everywhere and I mean everywhere to be able to keep themselves warm and get to work.

    Within that “great” services number.

    Medical spending down
    Recreation down and in fact negative
    Recreation:
    3q 2007 +3.5%,
    4q 2007 -0.1%,
    1q 2008 -1.1% That’s called belt tightening people.

    Oddball number. “Other” spending was way up (+5% was 0.4% last quarter), we get detail on that tomorrow.

  19. B.B. commented on Apr 30

    Andy,

    When did we say we were short? I am bearish on the macro level and quite frankly don’t see how we dont come out of this mess without a severe recession. But, does that mean I can’t short term trade long? I am with Ross. I have posted several times that 1420 on the S&P just seems way to easy. Thats my trading account. Now my 401K, that has been in cash since last year, and there it will stay for awhile. I think your point was that traders/investors that let their emotions take over miss alot of oppertunties. Now that I can agree with.

    Now, after watching Don Luskin and Jerry Boyer gush over the economy last night on Kudlow and grill Joe B. was simply amazing. I admit seeing their ‘bottom ‘ calling and their ego’s getting crushed over the next 6 months will be nice to see. According to Don and Jerry, we were never in a recession and even if we were, it’s over..

    Thanks BR for posting the real numbers.

  20. Ivo commented on Apr 30

    Barry had already two tradeable bottom calls this year (quite spot on) for 8-10% – the first bounce was weaker, this second one is maybe a bit stronger than expected.

  21. Roger Bigod commented on Apr 30

    Why do you hate America? There are so many happy things — new puppies at the White House, soldiers painting schools and handing out Bibles to kids, interviews with the life coaches of Idol contestants. So why do you waste our beautiful minds with cynical things like this? Also, some of the big words sound French, which makes me feel icky and sensual, in a vaguely erotic way.

  22. Estragon commented on Apr 30

    Financial Philosopher,

    I agree with your general point. We are indeed trying to determine not which girl is prettiest, but rather which girl will be judged as prettiest by others.

    I’m not so sure about US consumers doing the judging though, at least not over the longer term. Ultimately, I suspect it will be the judgement of the US’s major external creditors which prevails.

  23. Vermont Trader commented on Apr 30

    Sell in May and go away. Or better yet short the sp500 at 1400 on April 30th and wait for reality to bite.

    I’m net short and bearish right now.

  24. Kirzner commented on Apr 30

    Donnelly, I agree with you for the most part. I’m just saying the housing number was the most surprising. And the housing services number isn’t the same as housing operation (electricity and what you refer to in your post). Housing is a big number compared to electricity and gas or other housing operation. I wouldn’t mind more information about other, but I’m sure it would be hard to say one way or the other which direction it should go. I still don’t get why housing services are up in the middle of a housing-led downturn (granted that residential investment is down).

  25. kio commented on Apr 30

    1) Both CPI and GDP deflator are estimated according to strict procedures. They both give what data bring. So, when you say inflation (for real GDP) is not 2.6%, you say what data are wrong or procedures are changed somehow relative to previous cases.

    2) The NBER is a body which can say for itself. I would consider any advance estimates on behalf of the NBER as wrong-doing. (If they need external help, they can ask.)

    3) Real GDP per capita is a very good measure. Much better than overall GDP. But you have to use working age population instead of the total. ALso, if you take a look at the Census population estimates , you can find that the overall population does not grow these days by 1%. At a quarterly basis, these working age population estimates are very noisy. I would not take them seriously as a good input for the determination of recession.

    4) I do not insist that thereis no recession. I just say that your measures are not convincing – just (educated) guess.

  26. DL commented on Apr 30

    Colin,

    Thanks for the response.

    (Real GDP can never actually be negative, you are mixing up growth of real GDP and the figure itself. The ‘negative real GDP’ you refer to is GDP growth).

  27. Brian commented on Apr 30

    Here’s a thought….the vast majority of Americans have been in a recession since March 2001. And Barry has been pointing them out for a while.

    job growth < population growth income growth < inflation (actually a loss) The entire "growth" of the last 7 years is nearly equivalent to the amount added to individual and national debt. In terms of real dollars, the Dow is down considerably more than the 8-10% off highs. So unless you had a golden parachute for screwing up a company, how are you really doing? We've been in a "traditional" recession since September, but we still haven't recovered from the day Bush was "elected". Oh, and there's always money to be made in the stock market. The market is suppose to be about individual company's capacity to generate a return over time, not the irrationality of happy talk or bearish sentiment. And some sectors love a good recession, all those low betas laying around soaking up the sun.

  28. Michael Donnelly commented on Apr 30

    Kirzner, (thanks for the clarification, good to hear)

    But you’ve got the wrong data, housing was actually down compared to last quarter.

    Housing services (much larger than housing operation) was DOWN. Both nominal and real growth was 1% slower than the prior quarter. Let’s use nominal. Housing services (rent, mortgage, both excluding utilities) was 5.2% compared to 6.5% the prior quarter.

    Housing operation (electric, gas, phone, water, trash, etc) was up 11% was up 9% in prior quarter and up 5% in quarter before that

    Fun fact for all of you. Nominal total services was lower than last quarter, only real services were higher.

  29. muckdog commented on Apr 30

    Now those who were wrong are scrambling to redefine what a recession is. Good grief.

    The Democrats and the media have been beating the war drums of recession for months, if not the past few years, and guess what? There was no recession!

    Second-quarter GDP will be higher than the first, especially considering the spending from tax rebates.

  30. Michael Donnelly commented on Apr 30

    Muckdog, I’d love to lay down some money on that, you want to make a friendly bet?

    I’ll take +0.5% or lower, you’d have +0.7% or higher. 0.6% would be a push. Maybe we can get Barry to hold the money.

    Keep in mind that of the past 113 quarters (since Jan 1980) we’ve only had 15 quarters of +0.5% or lower growth. And 95 quarters of +0.7% or better. So if you want to be fair and throw in 6-1 odds I’ll take that as well.

  31. The American Mind commented on Apr 30

    Close, But Not a Recession

    The U.s. still isnt in a recession, but its close:
    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 0.6 percent in the …

  32. kk commented on Apr 30

    Big deal, a Big Picture data manipulated recession. So rear view mirror. A zero value added thread.

  33. Kirzner commented on Apr 30

    Michael,
    I’m looking at tables 2.3.5 and .6 and while it is true that growth slowed (they use annualized numbers which means the overall size is not that much different), overall housing services are increasing which is the only point I really wanted to make since I find it strange. I’m showing housing services at 1,517.3 Q1 vs. 1,498.3 Q4 in nominal terms. That means that it grew by 1.3% in nominal terms in Q1. The same figure is .54% in real terms. Of course some of the other housing components grew faster than housing services, but housing services had a larger effect (it is larger and grew significantly as well). 2.3.5 shows medical care increasing nominally by 1% and recreation increasing by .59% in comparison other increased by 2.1%.

    I really don’t know where you get that nominal services is down, I’m showing 5,949.7 vs. 6,040.2 nominal and 4,722.4 vs. 4,762.2 real. Even the percentage contribution to real PCE is increasing.

  34. wunsacon commented on Apr 30

    Roger Bigod…LOL!

  35. Mr. Obvious commented on Apr 30

    —–Original Message—–

    From: Jerry Bowyer

    Sent: Wednesday, April 30, 2008 11:09 AM

    Subject: RE: We Are In a Recession

    Okay, so here we are again. Another quarter and another plus sign. The economy grew every quarter last year and, so far, it’s continued to grow this year. The pessimistic-financial-pundit-industrial complex suffers another quarter of model-crushing data. Will they change their models? Don’t count on it. Fear sells, it sells newsletters; it sells bookings; it sells speaking gigs.

    Today, brace yourself for the tribe of Yesbuts.

    Yes, but the postive GDP is from inventory adjustments.
    Sure it is. Shouldn’t inventory be counted in GDP?

    Yes, but it’s also from government expenditures.

    Shouldn’t government spending be counted in GDP. Especially for those Yesbuts on the left…it seems that you see government expenditures as being a good thing, except when they boost growth.

    Yes, but Gross Domestic Income differs a little.

    GDI is a fine statistic, which will be rediscovered today in a desperate search for bad news. Even as I write, financial pundits are dusting off their college Macroeconmics textbooks and rifling through pages trying to relearn how GDI is calculated. Let me save you the trouble. Its made up of personal income, plus business profit, plus sole proprieter income. The business profit is domestic only, hence the D in GDI. If you want to capture the productive power of US business overseas, look at the long-neglected GNP, which has been doing quite well lately. Though, it’s not out for Q1 yet.

    Yes, but durable goods were down in Q1.

    Indeed they were, which means that the rest of the economy was strong enough to pull us into positive territory. On top of that durable goods were down, not because of economic weakness but because some probusiness investment tax cuts expired in December and were not reinstated until halfway through the first quarter. It wasn’t recession; it was a temporary tax code distortion.

    For the perma-pessmists who were flat out 100% sure that ‘we’re already in a recession, the debate is about how long and how deep’ – back to the spreadsheets.

    For the rest of you – have a nice day.

    Jerry Bowyer

    Chief Economist Benchmark Financial

  36. Michael Donnelly commented on Apr 30

    Kirzner, I wouldn’t survive a day without my $6,000 subscribtion to Global Insight data.

    Clarification as well, when I say down I mean decelerating. If something actually shrinks, i’d say negative or contracting. For most of economics and the business folks I deal with they only care if business is expanding or not. (rate of growth) They typically don’t care much about higher or lower than last period. (level of activity)

    Nominal Housing Services slowed in the 1st quarter. 5.2% annualized (1.3% q/q), it was 6.5% annualized in the 4th quarter.

    Total Nominal PCE Services slowed too. At 6.2% (nominal annualized) it is slightly lower than the 6.4% during the 4th quarter.

    To have something shrink (contract) would be HIGHLY unusual. Some reasons, inflation, net birth rate (more births than deaths), and migration (legal and illegal)

    How unusual? Take all the quarters from 1959 to today. 197 quarters, in 4 quarters REAL service PCE is negative. 193 are positive. If you use NOMINAL data you don’t get any negative quarters.

  37. Alfred commented on Apr 30

    “Congratulations! Its a Recession!”

    The worst headline ever!!!!

  38. Michael Donnelly commented on Apr 30

    Mr. Obvious and Mr. Jerry Bowyer,

    You might have forgotten but PCE durable goods exclude all business purchases, so any business investment tax cut wouldn’t affect durable goods.

    You may have also forgotten how many recessions were created in this country by wild inventory swings. I’m guessing when it bites you the other direction in the 2nd quarter, you’ll be a big fan of Final Sales and forget about GDP.

    Now I know that times right now are so good, we’ve only had to lay off 232,000 in the past 3 months. But strangely enough every time since 1948 we’ve done that, we’ve been in a recession.

    Would love to hear how “it’s all different now”

  39. Francois commented on Apr 30

    “Congratulations, You missed a 10% run in equity prices in six weeks by actually believing that current negative stories would have any affect on the stock prices.”

    Huh?

    Pray tell why should I care about the general direction of “equities” in the “market”?

    I short (put options) what goes down and buy (calls or stocks) what goes up. They call it trend following.

    Believe? Bwahahaha!
    Belief is the sister of Hope, which rhymes with dope.

    The only belief I hold is that markets can crush me at any time. It’s called “respect” in da market’hood, ya know watta’m sayin?

    ;-)

  40. Francois commented on Apr 30

    Mr. Obvious

    Question to you: the Jerry Bowyer cited in the pasted email in you post, isn’t he the same that wrote a piece about the Community Reinvestment Act recently?

  41. Mr. Obvious commented on Apr 30

    For the record, I am no fan of Mr. Bowyer. I used to listen to him on Pittsburgh radio, and he has always carried the water for the Bush White House. The guy hasn’t one ounce of objectivity in his body.

    I just thought his email was interesting in light of the contents, and how divergent his thoughts are from BR’s.

    ~~~

    BR: For an attorney, you use the word “Thoughts” quite lightly !

  42. Lilguy commented on Apr 30

    Following up on John Williams’ astute observation above about the divergence between GDP and GDI:

    I took a look at the data back to 2000 to see how the data reacted then. Then, GDI diverged HIGHER from GDP by a quite a bit (over $170 billion) going into the recession (Q1-2000), the reverse of today’s circumstance. OTOH, both were remarkably aligned (+/- $60 billion) from Q4-2003 through Q2-2007. Now, as you note, the divergence is expanding in the other direction, GNI is falling and GDP is not.

    My interpretation of this is that we are in the midst of a trend reversal from growth to recession. In fact, it demonstrates how statistical methods have difficulty “turning the corners” when directions change significantly. The shift may also reflect changes in reporting methodologies that I’m sure you will get to the bottom of.

  43. ac commented on Apr 30

    The 2nd quarter should be interesting. History tells me the we see a sharp deceleration in PCE growth and business investment if a recession has started. Feldstein seems to think so and what he meant “not to be fooled by Q1 GDP”.

    I didn’t think so last quarter, but we shall see I guess.

  44. Francois commented on Apr 30

    Michael Donnelly,

    Arguing with Mr. Obvious and Bowyer might prove a waste of time.

    I knew the name Jerry Bowyer rang a bell somewhere. I just found out one of Mr. Bowyer’s, ahem, pearls, in my archives.

    “Don’t Blame the Markets”
    http://www2.nysun.com/article/74903

    where the ineffable Mr. Bowyer blame the current housing crisis on the Community Reinvestment Act of…1977! It goes without saying that this bill was the brainchild of the damned libruls, as per Mr. Bowyer.

    For your entertainment, but only if you have the time and inclination to do so, you can find the crushing and fact-driven refutation here: http://tinyurl.com/5gydpk

    Original URL: http://economistsview.typepad.com/economistsview/2008/04/did-liberals-ca.html

    and here: http://tinyurl.com/65fqsx

    Original URL:
    http://economistsview.typepad.com/economistsview/2008/04/yet-again-it-wa.html

  45. Confuseius commented on Apr 30

    There is something that almost everyone is missing. Inflation is understated. Massively. “Real” inflation is probably over 10% annual, as evidenced by the figures of other nations that don’t massage their numbers as flagrantly as the West.
    Here’s the rub: if I’m a canny central banker and under-report inflation, then what is contractionary suddenly gets reported as expansionary! And what is actually a problem gets to be talked about as if it’s a solution!
    People talk about Prozac Nation, but isn’t that inevitable if we’re being Enroned on such a massive scale?!

    ~~~

    : Um, that’s what this post and the prior 2, plus the past 3 years, have been discussing.

    Click here: INFLATION

  46. Winston Munn commented on Apr 30

    Barry,

    I’d be careful tossing around the “R” word in a public forum – the “Smirker-in-chief” says it’s not a recession but an economic slowdown, by God, and he has the cells in Gitmo to prove wrong anyone who challenges that assertion.

  47. Bruce commented on Apr 30

    OK…I’m going to give you folks the answer to the energy crisis…free of charge..right here…my partner John and I were discussing this while jogging this afternoon, and I don’t see why this wouldn’t work…

    First, the French went to nuclear power years ago for their electric needs…no oil, no hope of any….ergo nuclear…..I think that approximately 85% of their needs are now through nuclear….(or we could use coal here in the usa…)

    Ok…now we mandate that all hybrids here in the usa are rechargable, and we have the technology to make this happen already….(I know you see where I am headed…)..most trips in the car are short and the car can be recharged at work…

    Most of the problems with electric cars is the extreme drain with things like heat and air conditioning…well, gas or diesel could still supply these comforts while the battery gets us to and from our primary destination…and we have coal, ethanol, etc to be used for the internal combustion part of our trips…

    This is implementable right now, and would save an enormous amount of imported oil…

    Holes in this idea???

  48. The Big Picture commented on May 7

    Positive GDP Recessions Are Typical

    After the Advanced GDP came out last week at 0.6%, I was surprised to read a variety of commentary about the economy that was factually incorrect. Several pundits and economists had concluded that since GDP was positive, we therefore could not possibl…

  49. Altos Research Real Estate Insights commented on May 23

    When is a recession not a recession going to be a recession?

    A few short weeks ago there was no doubt in the press that recession was upon us. The perma-bears, who have been calling for the Big One for nearly two years now, have declared that it’s finally upon us. I had a lunch with Nouriel Roubini in February gl

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