Is There Clear Sign We've Entered a Recession?

Excerpt from Raymond James Economist Dr. Scott Brown's latest economic commentary:

First, let’s be clear. There’s no clear sign that the economy has entered a recession. The major monthly indicators (nonfarm payrolls, industrial production, real business sales, real personal income) are trending flat or slightly lower, but real GDP rose at a 1.0% annual rate in the first quarter, and we may see double that for the second quarter (advance estimate due July 31). There’s some chance that annual benchmark revisions may change that view, but as it stands now, there has been no sharp decline in overall economic output.

That isn’t to say that people aren’t hurting. Clearly, household budgets have been squeezed by higher food and energy prices. It’s harder to find jobs, especially good ones. The housing correction is ongoing. Credit has gotten tighter despite the Fed’s aggressive rate cuts earlier this year. It’s not a “mental recession,” as Phil Gramm, former congressman and John McCain’s campaign co-chairman, recently put it (before his remarks, in which he also said we’ve become “a nation of whiners,” Gramm was thought to be in contention to become Treasury Secretary in a McCain Administration). However, the overall economy is not as weak as it is typically portrayed in the media.

Comments

[MarvinMBA:]

There is a lot of pain out there...during every downturn there are winners and losers and where you fall into could be just luck. We need a comprehensive energy policy, Fiscal stimulation and more jobs, jobs, jobs jobs jobs...got to get M1 moving again...MarvinMBA

2008 Jul 23 04:21 PM

[David Lentz:]

When the author says "real business sales, real personal income) are trending flat or slightly lower, but real GDP rose at a 1.0% annual rate in the first quarter", is he using the bogus official CPI numbers to produce the "real" adjustments, or something closer to reality?

With the difference between official CPI numbers and unofficial CPI numbers running in the 6%-8% range [www.shadowstats.com/al...], it's obvious that a pretty small change in the rigged CPI deflator wipes out the 1% growth in the GDP that the author bases his case on.

When the smoke clears, history will look back on this recession as having been one of the worst in recent times, having begun around January 2008, and continuing on into sometime in 2009. Assessments based on revisionist
stats (e.g., CPI) simply won't stand up to all the supporting data indicating that we are in a recession, and have been through all of 2008.

2008 Jul 24 08:54 AM

[rdr4:]

basing commentary on government satistics is simply delusional. The stats are baked. During the 70's, the government altered the way they count traffic fatalities to make it appear their 55mph speed limit was saving lives. If they would cheat on mundane topics, they would cheat on all topics.

2008 Jul 24 09:12 AM

[ksmithdc:]

A recession occurs when the economy stops growing. It is not when the economy is sluggish or there are problems. Our economy is still growing (albeit at a slower pace than in the past). Therefore we are NOT in a recession.

2008 Jul 24 09:38 AM

[Steven Hansen:]

if i were a professional economist, i would not risk my reputation making any statements on recession. a recession to me is a collapsing of an economy below the levels which it was operating. too many factors in our economy are pointed downward to hang your hat on simply gnp.

2008 Jul 25 01:09 AM