Saturday, August 11, 2007

The Recession That Wasn't

Ken Fisher cites the Bureau of Economic Analysis in his book "The Only Three Questions That Count" for quarterly GDP data (pp 60, table 2.1), finding that no quarter in the period from 2000 to 2002 had negative GDP growth. The lowest was 2001-q3 at 0.06%.

Thus, for the classic definition of "recession" (two negative GDP growth quarters), we didn't have one.

(Fisher doesn't like the GDP definition of recession, and cites other evidence that there was a brief one in 2001. Fair enough, Ken Fisher is smarter than I am and a gazillion times richer. The point is things still weren't terrible.)

So now Larry Kudlow can stop talking about the "recovery" now as there was hardly anything from which to recover. And we're well into the business cycle, possibly going down the other side if you listen to some. At some point the "recovery" blends into "the normal cycle of economic expansion". Also, the Democrats can stop talking about how the economy under Bush has been awful, because that's a flat lie.


lunkhead said...

I agree that the economy is robust. I do worry that the middle class continues to get squeezed by inflation and wage depression brought upon by illegal aliens. It's also a bad idea for China to own so much of our notes on the national debt. Believe it or not, the only candidate bringing up the latter issue up is Satan Incarnate herself, Hillary.

Sockless Joe said...

The Chinese own so much US debt that to precipitously sell much of it would massively devalue their own holdings, essentially shooting themselves in the foot in order to wage an economic attack on the US.

Not to say that they wouldn't ever sell dollar assets, but that the fear is overblown. The Chinese need to find a way to very slowly unwind their US dollar exposure; it's in their own interest.