January 31, 2009

It's a Recession, Really

By Randall Hoven
For those of us waiting for two consecutive quarters of shrinking real GDP before we declare a "real" recession, we can stop waiting.  The preliminary estimate for the 4th quarter of 2008 showed a decline of 3.8% at an annual pace, after also declining in the 3rd  quarter.The media spin is to aid Democrats, which means that right now the spin is to make our present situation look like an unprecedented crisis (both to make Bush look bad and to provide cover for transferring lots of borrowed money to Democratic interest groups).So I will try to provide the service of putting current numbers in perspective, with as little spin as possible.First off, the "annual rate" of 3.8% shrinkage is what we'd get if that same one-quarter pace continued for four quarters.  What actually happened was that GDP shrank 0.1% in the 3rd quarter and 1.0% in the 4th, for a combined loss of 1.1% over two quarters.  Through all of 2008, the real GDP shrank just 0.2%,...(Read Full Article)