What Does the President Know, and When Did He Know It: "We're not in a recession..."

From Reuters:

"We're not in a recession, we're in a slowdown," Bush said at a news conference at the end of a two-day summit with Canadian Prime Minister Stephen Harper and Mexican President Felipe Calderon.

This statement was made with a seemingly amazing amount of certitude. So much so that I am impelled to ask, what does the President know, and when did he get to know it? For sure, he has access to data that we do not have. And he has an army of economists to advise and inform him. So I think he must know something I don't.

His statement does give me the opportunity to update these graphs of series that the NBER places primary focus on in determining recessions.[1]

Figure 1: Log personal income less transfers in 2000Ch.$ (blue) and log nonfarm payroll employment. Real personal income calculated by subtracting off transfers from personal income, and deflating by the personal consumption expenditure deflator. NBER-defined recessions shaded gray. Source: BEA, St. Louis Fed FRED II, accessed 23 April 2008, and NBER.

Figure 2: Log industrial production (blue) and log manufacturing and trade sales, in Ch.2000$. NBER-defined recessions shaded gray.Source: Federal Reserve Board via St. Louis Fed FRED II, BEA, accessed 23 April 2008 and NBER. .

Figure 3: Log real GDP, in billions of Ch.2000$. NBER-defined recessions shaded gray.Source: Macroeconomic Advisers, accessed 23 April 2008, and NBER.

For its part, the NBER defines a recession thus:

A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. ...

A "slowdown", while not explicitly defined by the President, conjures in my mind decreasing, but positive, growth rates in the indicators of economic activity. I'll let the reader decide which characterization is most apt (of course, keeping in mind the role of data revisions -- which in any case tend to be downward around (downward) turning points [2], [3]).

Other related discussion: WSJ RealTime Economics, WSJ MarketBeat.

Comments

[JoeChristmas:]

You wrote an entire article, with graphs, on something Bush said about the economy? Do you really think he can even spell recession, much less define one? "What does he know and when did he know it?" Jeez.....

2008 Apr 24 06:27 AM

[pochovilla:]

The President knows that in a few months that someone else will have to deal with all of the problems that were not addressed by his administration. How could he possibly have any understanding of anything that does not meet his political ideology? The track record of the Republican Administration speaks for itself. All politics all of the time, too many cases of bad advice and a refusal (denial) to allow facts to influence decisions. I agree with JoeChristmas, this has nothing to do with graphs, charts, data or anything else if it doesn't meet the preconceived position of the President or his political advisers. I offer FEMA, OSHA, FDA, FCC etc as examples of Sen Dorgan's comment "staggering gross incompetence" that all of Congress share.

2008 Apr 24 08:02 AM

[Calimanchi:]

This president often says things with certitude. A few months later, when facts play out, he often says the exact opposite with the same certitude. After almost 8 years, we all should know this by now.

2008 Apr 24 08:08 AM

[beandog:]

That's because the President knows we are gonna be ok in a few months, and he is right.
beanieville.blogspot.c...

buy solars!

2008 Apr 24 08:09 AM

[hattryx:]

how will the liberal types deal with their lives if bushie happens to get something right? he's good, and you all know it. if you're a democrat, just buy your gold, hoard your rice and move to france. america has no use for flip flopping sissies like yourselves. here's to a mccain- romney landslide.

2008 Apr 24 08:40 AM

[richjoy:]

We have always looked to our president to calmly guide us through the rough patches. I'm no supporter of Bush, but he is no different in that respect than any other -- no president is going to say we are in a recession until a recession has been officially declared. They always look at the bright side, it's in their job description, unless it can be blamed on the other party.

And Green of Briefing.Com may be right, this is painful, but is not a recession as defined by 2 qtrs of negative GDP. By the time the NBER gets around to declaring this an official recession, it won't matter anyway, as it will have passed. (And I hope they do declare it a recession, so we can start the clock again, and hopefully, it will be 4 years until the next recession.)

2008 Apr 24 08:53 AM

[Johnc:]

I agree with richjoy. ECRI told me everything I needed to know late in 4Q for $149 a year. Let NBER declare a recession in June/July so that we can start trading the recovery.

2008 Apr 24 09:13 AM

[Jason Rines...:]

I will say this. President Bush got handed the biggest *hit sandwich in all of America's history since Abe Lincoln's day. He got handed a recession, exacerbated by 911, Hurricane Katrina, threat of nuclear proliferation and terrorism (I have contacts that say a nuke was de-fused near the RNC held in 2006 in NYC). I will say that if your President, you also need to focus on the domestic economy. Trust but verify was a term the President liked from Reagan but he seemed to trust only. Handing foreign policy to Condi Rice was a disaster. Now I will say this man did an awsome job term one and got overwhelmed, attacked from all sides within his cabinet and without for political gain. This man was obtuse and made some big mistakes, but then again evereone hated Lincoln too North and South before he won the Civil War. I'll add one last thing, if he declares energy crisis and gets the $200 B from Treasury as it appears he may do in June it will right some mistakes big time.

2008 Apr 24 09:34 AM

[vaduz:]

the recession will bring downward revisions of high magnitude for all the earnings forcasts.................

2008 Apr 24 09:34 AM

[Jason Rines...:]

Your right Vaduz, a ton of companies had there entire earnings of all of 2007 erased in Q1, that includes my own company I own, and I am in consumer healthcare marketing, a very recession resistant market. My surveys showed consumer juggling debt decisions with how to heat the home, buy meds or buy heating oil or natural gas. It was the worst quarter in business for my business - EVER. Boom and Bust economy sure is an apt description.

2008 Apr 24 09:46 AM

[mooreden:]

It doesn't matter what George W. Bush knows or doesn't know. No president will ever say the US is in a recession until the economic data -- unemployment rate and GDP numbers -- have become so bad he can't avoid admitting it. They're not that bad yet so he won't say we're in a recession. It doesn't mean anything more than that.

2008 Apr 24 12:43 PM

[Urbane Gori...:]

I have been told by people that have actually met and talked with "Dubya", that he is quite smart. I just don't see it... Either he is very good at snowing people, or he's an out-and-out liar. Either way, as far as I'm concerned, he is the worse president in my 59 year lifetime. I'll be glad when he's gone. Further, as a lifelong Republican, I swear "I will never vote GOP again!". And, I'm really sorry that I wasted my vote on a Libertarian candidate last election. That will never happen again. If the Dems chose Mickey Mouse to run this time, that is who I'll vote for. And that carries down to the lowest level of elections. No more GOPS! Not even for teh post of dog-catcher!

Thx jegan ;-/

2008 Apr 24 02:16 PM

[Just Say Whoa!:]

I'm concerned for the mental health of the 20% that take seriously anything Bush utters.

Are they insane?

Stupid?

Ignorant?

Pathological liars?

All of the above?

2008 Apr 24 02:18 PM

[User 183084:]

Bush is the worst thing that has happened to the world since hitler. He f**ed up on everything.
1) messed up economy.
2) housing crisis.
3) unbalanced budget. hugh tread deficit.
4) Weak dollar. This has been a significant cause for oil price increases and commodity price increases. There is growing unrest in many countries because of rising cost of food.
5) He made america less secure. Iraq is a major recruiting ground for al qaida.

What a junk. what a waste this man has been.

2008 Apr 24 05:56 PM

[coldcut:]

We'll miss him. God bless America.
www.youtube.com/watch?...

2008 Apr 24 06:04 PM

[HilBily:]

Wholeheartedly agree with jegan--G W Bush is the worst prez in my lifetime, and probably has ruined the GOP for many years to come. Almost every problem in this economy can be traced to his stupid policies, both foreign and domestic. How he retains even a tiny core of defenders baffles me. As for the coming election, I would vote for a steaming pile of cow feces over the Republican candidate. Thank you, Mr. Bush.

2008 Apr 24 08:15 PM

[curious cat:]

you guys are a little bit too hard on g.w. after all, he was way ahead of the grain shortage problem. he's been sending rice to other countries for years. pu, rum, pum!

2008 Apr 25 12:18 AM

[sticktofacts:]

Any real economist knows that a recession is technically 2 consecutive quarters that the Gross Domestic Product is negative. We still have positive GDP although the growth of the GDP has decreased and that is called a SLOWDOWN by economic analysts. Bush is right.

2008 Apr 25 03:02 AM