Russ Abbott

Recession: The Forgotten Indicia

It's never been clear to me why we care so much about whether the label "recession" applies to a particular situation. (The only real reason we might care is if there are legislated or regulatory procedures that kick in if it does apply. That may be the case. But it's also a special case, and I don't see any of the discussions of whether we are in a recession referring to any of these specifically.)

In general it really doesn't matter what label applies; what matters is what's happening. It makes no difference whether a particular label applies to someone who is (or isn't) out of a job or to someone who makes (or loses) money in the market. What matters are the concrete facts on the ground, not an aggregated label that may or may not loosely summarize those facts.

If unemployment is at 10% but GNP has not declined by 1.5% things are still very bad even though that situation may not fit the formal definition cited in the article.

Let's stop worrying about whether the economy is "in a recession." It's state is what it is. The question for Seeking Alpha is what implications the current state and future direction of the economy have for the markets.