As usual, the mainstream media, frothing at the mouth to bring us each day’s message of doom-and-gloom, has for several months now made it impossible to avoid the constant bombardment of references to THE recession and THIS recession. This must be the most widely predicted/presumed recession in American history. A NBC News/Wall Street Journal survey from April 30 indicated that 8 in 10 Americans believed we are in recession…80%!
But there is one small detail that has been overlooked in this frenzy – We are NOT in a recession and there is NOT going to be a recession this year. Any economist will tell you that a recession is defined by two consecutive quarters of negative economic growth. Guess how many quarters of negative GDP growth we have had – exactly zero! The Bureau of Economic Analysis reported Wednesday that U.S. real GDP grew at a 0.6% annual rate in the first quarter of 2008. This is the same growth rate we saw in the fourth quarter of last year.
To be fair, 0.6% growth is by no means a booming economy. The economy has clearly slowed and the housing sector continues to contract. But this economy, including the labor market and the consumer, has proved to be much more resilient than most would have you believe, and parts of the economy are booming (transportation, exports, energy, agriculture, and many service sectors like health care and education).
Precious few economic prognosticators have never wavered in their assertion that there is no recession – notably among them are Don Luskin and Brian Westbury. Cheers!
There is a saying that “the media has predicted 10 out of the last 3 recessions,” and here we have yet another example of the media crying wolf. I’m just saying, do yourself a favor and try to deflect pessimism expressed for pessimism’s sake.
P.S. On a related local note, the Massachusetts economy chugged along at a healthy 3.2% annual rate in the first quarter of 2008.
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