The Jury Talks Back

12/1/2008

So you’ve decided to screw the US Economy…

Filed under: Uncategorized — Scott Jacobs @ 4:17 pm

So, the National Bureau of Economic Research has decided to completely ignore the definition we’ve used for, well, for a long time, an declared that we’re in a recession.  Not only that, but we’ve been in one since the start of the first quarter of 2007 (Q1 2007).

This is, frankly, bullshit.  I’m sorry, that’s all I can call it.  A recession, by definition (or at least until just recently), has been two or more consecutive quarters of negative GDP growth.

Say it with me, kids: “two or more consecutive quarters of negative GDP growth”.

Very good.  I knew you could do it.

Now, why do I belabour this point?  Why do I harp upon it?

Well, because of stuff like this:

You’ll need to click on that to get a decent view of it…  Sorry.

Now, I know, that only goes back to Q3 2007, so how about this one?

Wow.  Sure doesn’t look like a recession trend, does it?  Isn’t that interesting?

And why is this important?

Dow Plunges 680 Points as Recession Is Declared

The evidence of a recession has been widespread for months: slower production, stagnant wages and hundreds of thousands of lost jobs.

Sure it has, if you’re a drooling moron.  Someone who slept through that day of Econ 110.

Well done, NBER.  You cost the DOW 7.7%.

Very well done.  Assholes.

34 Comments

  1. Geez,
    I went through about 60% of the “family” at NBER and you’d think with all that Academic horseshit um Horsepower, that they’d have the commonsense to shut up!
    But I guess everyone has gotten accustomed to ridiculous, unfounded growth, even in the Hallowed Ivory Towers and are certain that doom has befallen our fair land.
    It’s either that or they just want to be the first ones to cry wolf. You tell me.
    Meh.

    Comment by pitchforkntorches — 12/1/2008 @ 4:59 pm

  2. The point is to make the first quarter of 2009 look that much better.

    Comment by DRJ — 12/1/2008 @ 5:09 pm

  3. No doubt. Magically Ocarter is in office, and it’s all better!!

    HUZZAH!

    Comment by Scott Jacobs — 12/1/2008 @ 5:10 pm

  4. Come on, tell us what you really think! Don’t hold back. You are Dead Center Head On! On Friday the dow goes up 500 and it’s all Obama’s work. Todat it goes down 700 and it’s all Bush’s fault??? If the One is responsible for the rise, is he not also responsible for the drop??? Not according the the American Media Sleazes. BTW, how did the stock market do the day after Obama won the election? Oh yeah, it had the biggest post-election day drop in friggin History!

    Comment by J. Raymond Wright — 12/1/2008 @ 5:42 pm

  5. Some say that China’s purchasing managers index fall caused the Dow drop today.

    more here

    This makes more sense to me than a recession declaration I now see is phony, although it doesn’t need to make sense at all.

    Comment by Amphipolis — 12/1/2008 @ 7:20 pm

  6. There are other metrics for deciding whether a recession has occurred; “two quarters of negative growth” is simply the best known one. And, although they are non consecutive and therefore don’t comply with the definition, we have had two quarters with negative GDP growth out of the last five.

    Nor do I think that today’s loss in the Dow was because of that. I tend to think that the stock trading crowd is either stupid as anything, or suppers from mass Anxiety Panic Disorder, but the news that there’s been a lot of job losses in the last year (which is essentially what the NBER pronouncement is based on) shouldn’t be news to anyone who makes any pretense of following the news. It’s one of the “known knowns”.

    The CNN business correspondent (the shaved head guy, whose name I can never remember) made the point tonight that many people were probably trying to cash out in the wake of last week’s record setting run up. The term often used for that is “profit taking”. People see the stocks have gone up, and decide now is a good time to get out; the more sellers, the more the market declines as prices fall.

    Comment by kishnevi — 12/1/2008 @ 7:46 pm

  7. we have had two quarters with negative GDP growth out of the last five.

    Which equal together .7 percent. Hardly earth-shattering…

    Comment by Scott Jacobs — 12/1/2008 @ 7:48 pm

  8. The CNN business correspondent (the shaved head guy, whose name I can never remember) made the point tonight that many people were probably trying to cash out in the wake of last week’s record setting run up.

    Which they likely wouldn’t have needed, had the R word not been said. a 500 point rally doesn’t just disappear without someone or something spooking the investers.

    Comment by Scott Jacobs — 12/1/2008 @ 7:54 pm

  9. Scott, the point is that if a lot of people decide that that stocks have gone up enough to make it reasonable to sell and realize a profit, the increase in people trying to sell will by itself cause a large downtick, without any other input. Just as happens with any other commodity.

    Of course, given that the stock market in the last two months seems to be under the control of a mob of headless chickens, I’m not sure we should look for a reasonfor any change in the stock market, up or down.

    Comment by kishnevi — 12/1/2008 @ 9:19 pm

  10. On that last point, Kish, I will offer my complete agreement.

    Comment by Scott Jacobs — 12/1/2008 @ 9:38 pm

  11. There are reasons that the market goes up and down? We’re not doomed to follow the Elliott waves? Oh joy!

    Comment by htom — 12/1/2008 @ 9:55 pm

  12. Scott–

    I’m pretty sure they said “since December 2007″, not “Q1 2007.”

    Comment by Kevin Murphy — 12/2/2008 @ 12:52 am

  13. It’s been posted on some prominent economics blogs that the fluctuations you see in the stock market are near-pointless to monitor until the end of the year.

    1. Due to the downturn and the crash in the real estate market and all the subprime hullabaloo, all the leveragers have to deleverage and unwind their positions to get to something resembling safety. (This is the whole point of unfreezing the credit markets – so the firms can still remain solvent day to day while they unwind.)

    2. Various methods of accounting have certain dates at which they are monitored, generally the end of the year. They want themselves to be in the best arrears as possible at that time and that requires selling before the end of the year as opposed to a more desirable time.

    So expect rollercoastering. It’s not a big problem unless it goes down and stays down and gets worse.

    Comment by luagha — 12/2/2008 @ 8:50 am

  14. IF you really want to dump on the econ board, look at the negative GDP quarters Q1 and Q3 of 2000 that they did NOT include in a recession that supposedly started in Q1 of 2001.

    Comment by Kevin Murphy — 12/2/2008 @ 9:15 am

  15. They must have a lot of staff there that got their experience at CBO,
    where everything is predicated on “base-line budgeting”.
    If they were predicting a growth rate of 2%, and it came in at only 1.5%,
    under “base-line” rules, that’s a reduction, ergo, negative growth.

    You ain’t seen nothing yet, folks. It’s only going to get worse.

    Comment by Another Drew — 12/2/2008 @ 11:28 am

  16. Your definition of a recession is an accounting gimmick that does not reflect the economy accurately.

    Your using the old rule of thumb that a recession is defined as two consecutive quarters of declining GDP. NBER is defining recession as a significant decline in economic activity spread across the economy, lasting more than a few months.
    you can have a recession without two consecutive declines in GDP (we did it in 2001)(Remember….. you guys blamed Clinton for that one).

    GDP is a pretty crude measurement of economic well-being. It measures the output of the economy, but not some of the things that matter most, such as jobs, income and wealth.
    GDP includes inventory stockpiling and export growth, things that don’t really increase the living standards of Americans.

    I thought you guys were blaming Obama on the recession?

    What happened?

    If you really believe that the fundamentals of our economy have been strong……. I suggest you vote for McCain :)

    Comment by Oiram — 12/2/2008 @ 4:21 pm

  17. Comment by Oiram — 12/2/2008 @ 4:21 pm

    A classic example of the battle between liberals, whose base operating mode is “feelings” (I feel that…”);
    and conservatives, who deal in “facts” (“The data shows…”, or “I think that…”).
    “Two consecutive quarters of declining economic activity” is an objective measure (fact);
    “a significant decline in economic activity spread across the economy, lasting more than a few months” is a subjective measure (feelings).

    Classic “Mars & Venus”.

    Comment by Another Drew — 12/2/2008 @ 8:19 pm

  18. Just a bit of blabbering there on number 17 Another Drew. Your assuming I was giving you my “Feelings” there because I’m a liberal I guess.

    The “Data” shows that we used the system I described in comment #16 for our 2001 recession.

    How come you had no problem blaming Clinton for that one?

    Comment by Oiram — 12/3/2008 @ 10:54 am

  19. The “Data” shows that we used the system I described in comment #16 for our 2001 recession.

    Amusingly, I don’t exactly recall it being CALLED a recession…

    Comment by Scott Jacobs — 12/3/2008 @ 11:04 am

  20. What was it called Scott?

    And maybe you could explain that to the many of your compadres that like to skew Clinton with that amusement.

    Comment by Oiram — 12/3/2008 @ 11:26 am

  21. What was it called Scott?

    Don’t know. “slow down” or “tightening”, I suspect. How about you cite three sources that say it was a recession?

    Comment by Scott Jacobs — 12/3/2008 @ 11:27 am

  22. So many right wing sources to chose from Scott.

    All you have to do is type in Clinton recession 2001 in google.

    Try the first two:

    HERE

    HERE

    Then to kind of tie my point together, here is NBER’s

    HERE

    I love how you want it both ways. Blame Clinton……. but how dare you blame Bush!

    Oh wait……. you absorb your buddy Rush, “Obama Recession” yeah that’s the ticket!

    Comment by Oiram — 12/3/2008 @ 11:54 am

  23. Comment by Oiram — 12/3/2008 @ 10:54 am

    I was not discussing the 2001 recession – another case of your moving of the goal posts, again!

    I was talking about the diregard of an objective measure of the economic condition we face today (though I believe that data released after the first of the next year will show that we have been in recession since 1 July 08 – two consecutive quarters of negative growth), and its’ replacement by a subjective measure by the “authority” that you cite.

    Nice try. Perhaps you will do better next time.

    Comment by Another Drew — 12/3/2008 @ 12:50 pm

  24. #23 Yeah nice try…… right.

    The original post here is discussing the validity of calling our current economy a recession.

    It does not take into consideration how 2001’s recession was labeled.

    I deducted based on this site, and other right wing sites that 2001’s NBER recession was blamed on Clinton.
    Again, apparently no problem from you on that assumption.

    See Another, I’ll accept your ideas of “Clinton’s Recession” in 2001. It’s debatable, but I see your point of view. Why is this one different?

    Who’s moving the goal posts?

    Sorry but if you want to mislead America in order to not see the stock market go up…….. well then there might be our current economic problem.

    What can I tell you Another, your smart figure it out.

    Comment by Oiram — 12/3/2008 @ 1:14 pm

  25. Sorry but if you want to mislead America in order to not see the stock market go down…….. well then there might be our current economic problem.

    I meant.

    Comment by Oiram — 12/3/2008 @ 1:52 pm

  26. Sorry but if you want to mislead America in order to not see the stock market go down…….. well then there might be our current economic problem.

    Which is more misleading? Applying a pejorative label to the market without any actual metric upon which to base your decision, or NOT applying a label because the current situation doesn’t match the set requirements in the definition?

    Again, you want to “feel” your way around the issue while I, as someone obviously far more conservative than you, would rather rely on actual observable points of data.

    But you were not reasoned into your current point of view, so it will be impossible for me to reason you away from it.

    Comment by Scott Jacobs — 12/3/2008 @ 2:04 pm

  27. #26 You know Scott, look at the situation we’re in now.

    Don’t you think it might have helped to know that our productivity was creating a recession back in January of this year instead of now?

    I know, I know, you have your old system of labeling. That’s fine.

    But please know that I will be hanging on to this link anytime you or anyone for that matter here cites 2001 as Clinton’s Recession.

    The method used back then was the same as now, that’s reason and quite observable my friend.

    Comment by Oiram — 12/3/2008 @ 2:37 pm

  28. Don’t you think it might have helped to know that our productivity was creating a recession

    Actaully, productivity can’t cause a recession.

    In fact, productivity is what gets you OUT of a recession. Not spending, not changing definitions, not taxing the bejesus out of industry.

    You have to MAKE things, so people (prefferably people outside the country) will BUY them. The more you make and people buy, the better the economy.

    Our economy is in the tank because people who REALLY should have known better were acting like housing prices would go up forever, and thought that loaning piles and piles of money to people WITHOUT JOBS was a smashingly good idea, and the government did absolutely nothing to suggest that perhaps being careful with money was the way to go.

    But it fits so well with your FEELING that Bush has destroyed the country that you are utterly unwilling to listen to FACT, and instead have gloomed onto the idea that since it FEELS like a recession, it must BE a recession, logic and truth be damned.

    If you’d actually read the full articles, you’d have noticed that one of them said no one even agreed WHEN the “recession” started. You know why?

    BECAUSE THEY WERE MAKING SHIT UP AS THEY WENT.

    If you can’t say “this is definately when it started, because the data says so”, you don’t have it. Period. End of story.

    Comment by Scott Jacobs — 12/3/2008 @ 3:15 pm

  29. #28 “BLAH…. BLAH…….BLAH…….”

    Except for “In fact, productivity is what gets you OUT of a recession.”

    We haven’t had productivity, that’s the point.

    Where did I ever say “Feeling that we’re in a recession”?

    And hey Scott, I noticed your not addressing the recession in 2001. I gave you several sites (probably left leaning) that assume Clinton caused it.

    How can they do that if according to you it wasn’t really a recession?

    Comment by Oiram — 12/3/2008 @ 3:48 pm

  30. #29 And hey Scott, I noticed your not addressing the recession in 2001. I gave you several sites (probably right leaning) that assume Clinton caused it.

    Either Freudian slip or I’m working too much :)

    Comment by Oiram — 12/3/2008 @ 3:56 pm

  31. I gave you several sites (probably right leaning) that assume Clinton caused it

    Well, aside from NRO that said it wasn’t clear when it started…

    Thus my POINT, you thundering moron!!!!

    Jesus god boy, ain’t you got no brains?

    Comment by Scott Jacobs — 12/3/2008 @ 7:55 pm

  32. I’ve got brains enough to know that you’ve been blaming Bill Clinton for NBER’s 2001 recession, and now claiming “it wasn’t clear when it started…” VERY CONVENIENT.

    Why do you feel the need to defend The Bush Administration so much Scott?

    I mean, if you were to blame our current recession on the Dem’s House and Senate, at least that would be plausible, debatable, but at least plausible.

    I get it though, very shrewd. NBER kills your idea of “The Obama Recession”. That’s it isn’t it? I mean let’s call a spade a spade here.

    The Stock market tanks that much more after Obama is elected and the idea of a recession having started long before Obama even won the primaries blows your whole theory, and Rush’s for that matter.

    And I’m the “thundering moron”????

    I’m going to refrain from calling you a “moron” Scott. Indeed your quite smart.

    Thundering Misleading Spin Meister is more the label for you.

    I’m glad Americans aren’t buying it though.

    Comment by Oiram — 12/4/2008 @ 9:38 am

  33. NBER kills your idea of “The Obama Recession”. That’s it isn’t it? I mean let’s call a spade a spade here.

    You just love to project, don’t you…

    Did I say it was an “Obama Recession” in any way, shape, or form?

    Did I even say there was a recession?

    No, because I have been saying THE ISN’T A RECESSION!!!! READ my god damn WORDS you dunderhead.

    Yes, the market is experiancing big drops since the November election, but it ALSO saw a massive drop with the plans to bail out the likes of AIG. I don’t blame OBAMA, I blame the fear of what everyone thinks the programs he said he wanted would do to industry.

    Which is almost blaming him, but different, though I really doubt you’ll understand the difference, as you have obviously been unable to grasp the actual words I have said.

    I hold little hope you’ve suddenly graduated to “grasping nuance”.

    And yes. You’re a thundering moron. I say that one needs to rely on recognized, accepted definitions to mark a recession, you claim otherwise, and as proof cite an article that talks about how people are areguing over if Bush inherited a strong economy, or one in recession.

    By the “new rules”, it is apparently difficult to tell what the economy is – strong or receeding. The old rules make it pretty damn clear. Your article proved my point, and you strut like you won something.

    I’ve crapped things smarter than you. You make me long for the halcyon days of Levi, where at least his vulgarity amused me.

    Comment by Scott Jacobs — 12/4/2008 @ 2:38 pm

  34. LOL Scott, you crack me up.

    I’ll accept all that you wrote.

    Basically you don’t think the recession rules should be changed, even though the old way of looking at what defines a recession is outdated in our ever changing global economy.

    I could do without the shouting and name calling, but at least you don’t agree with Rush and Hannity, labeling whatever you want to call we’re going through….. “Obama’s Recession”.

    And at least your not one of the morons who blame Clinton for 2001’s non recession.

    I don’t know who Levi is, glad you can’t crap as smart as him :)

    Have a nice day :)

    Comment by Oiram — 12/4/2008 @ 4:21 pm

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