My pal James Pethokoukis is a 2002 Jeopardy! champion — so I don’t lightly challenge his knowledge of either the esoteric trivia or data driven facts.
However, when he — along with Messrs. Wesbury, Mankiw, & Kudlow — declared unequivocally that, since there have been no negative quarters of GDP, there is no Recession, I picked up that challenge. As the publicly available GDP data I pulled from the Bureau of Economic Analysis and the Federal Reserve Bank of Philadelphia showed, these gentlemen were incorrect: Recessions can and do begin with positive GDP data.
While no one can say for sure as of May 10, 2008 we are definitely in a recession, I certainly see plenty of evidence suggesting that is a very strong possibility.
Similarly, James cannot say for sure that a +0.6% = No Recession — though I graciously concede he also has some evidence to back up his claims. Indeed, Jimmy P. is so confident, he is now calling this The Recession That Wasn’t.
Well, we will find out
soon enough eventually. Hence I propose the following bet: If a recession is eventually declared by the NBER, and if in between the official start and finish points there is any month in the first or second quarter of 2008, I win. In other words, if any part of Q1 or Q2 2008 is part of a recession, James loses.
If there is no recession, or it there is one, but it doesn’t include any month in Q1 or Q2 2008, James wins.
Loser buys dinner for 4, at the restaurant of winner’s choice. Why 4? Winner’s and loser’s spouses are included. The wager includes dinner, wine, car valet, and tip.
James, do we have a bet?