Baseball Crank
Covering the Front and Back Pages of the Newspaper
July 31, 2008
BUSINESS/POLITICS: A Word Means What I Say It Means

Is the U.S. economy in a recession? The Democrats and the media have been saying so for a while, but the funny thing is, "recession" is a word and it has a meaning, and the fact that the economy is throwing off a lot of scary indicators and people in particular businesses or jurisdictions are losing jobs may mean the economy has problems, but it doesn't mean we're in a recession - at least not yet - any more than clouds in the sky mean that it's raining. A recession requires multiple quarters in which the GDP declines - that's what it means, no more and no less. It's true that you have to already be in a recession before the data comes in to prove it...so how many consecutive quarters of negative growth in the economy are we working on right now?

Well, the data is in this morning, and in the most recently concluded quarter - the 2d quarter of this year - the economy grew, at a 1.9% annualized rate, the best since the 3d quarter of 2007.

Great news? No. 1.9% isn't the kind of robust growth we'd been used to since 2003, and the underlying structural worries are still there, and some reports are crediting short-term stimulus checks and weak-dollar-driven drops in imports, neither of which is cause for long-term celebration. But as usual, the bad news has been overstated by efforts to paint this as 1933 or 1979 all over again. If we elect a president who wants to jack up taxes, close off trade and hold the line against domestic energy production, though, it might be.

PS - If you want a gander at how much worse things could be, check out the Detroit housing market (Democratic mayor, City Council, Governor and state legislature for years now).

Posted by Baseball Crank at 9:03 AM | Business • | Politics 2008 | Comments (6) | TrackBack (0)
Comments

Couldn't you have just stopped with the fact that we are not in a recession, and ended with the fact that presidents, in any event, have little control over broader economic trends? That would have been more than enough to make your point.

But why go as far as blaming the Detriot housing market on the Detriot politicians? What kind of argument is that?? Good luck with that one.

Posted by: MVH at July 31, 2008 10:53 AM

In general, presidents have a lot more ability to do harm than good to the economy...certainly there are business cycle trends that the president can no more control than he can command the oceans (well, OK, not everybody agrees that the president can't command the tides).

The economy of Michigan in general and Detroit in particular is in terrible shape due to the confluence of long terms trends and disastrous public policy. The Democrats are very much responsible for the poisonous business climate there. The state was in bad shape for quite a while during the time when the rest of the country was booming.

Posted by: The Crank at July 31, 2008 10:58 AM

"The economy of Michigan in general and Detroit in particular is in terrible shape due to the confluence of long terms trends and disastrous public policy."

If you want to argue that, go ahead, but I wouldn't use the housing data you provided as evidence. The link within the link you posted, which contained the graph of Detriot housing prices - http://mjperry.blogspot.com/2008/07/yikes-avg-detroit-home-price-falls.html - suggests otherwise. According to that graph, home prices rose from around 70,000 or so in 1998 to 97,000 in 2003, and then dropped precipitously to $19,448 in 2008. Thi

That is hardly consistent with the kind of gradual, continual decline you would expect if the long-standing Democratic rule was to blame.

Posted by: MVH at July 31, 2008 11:17 AM

Uhhh, don't go running with those numbers yet. The Commerce department also published that Q4 2007 went negative, where it was previously believed to be positive. And you are very right on the stimulus money the government borrowed helping.

"A recession requires multiple quarters in which the GDP declines - that's what it means, no more and no less. "
Not really. The NBER phrases it as "a significant decline in economic activity lasting more than a few months". This isn't something new, it's been out there for quite a while.
http://www.nber.org/feldstein/bg052201.html
http://www.businessweek.com/bwdaily/dnflash/content/may2008/db20080518_499756.htm

This is a more generally accepted definition
vs pure theory.

On the upside, by the time one is actually determined to have occurred, we may be in the shallow recovery out of it. Hopefully.

Posted by: Dave at July 31, 2008 5:20 PM

I do business in Detroit and every other major US talent market, and I can assure you, Crank, that any economic trend or indicator there - whether it be the housing market or the price of toilet paper - has far more to do with the complexities of globalism, free trade, and the horrible market conditions for American manufacturing, namely automakers, than any local government expertise or failure. Yet another stretched post based on longshot logic for your election year pleasure.

Posted by: macsonix at July 31, 2008 11:30 PM

Crank,
Have you just given trying to be credible? The Detroit area as you call (do some research) is a tri-county area that is "gasp" Republican outside of Detroit. I guess the automakers continuing to depend on SUV's profit despite rising cost of fuel has nothing to do with anything. How about the total decline of American manufacturing jobs to cheap foreign labor is a factor. Nah, why do research when you can just blame the other guy.

I want my old Crank back not this pandering imposter.

Posted by: javaman at August 1, 2008 5:02 PM
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