Is It A Recession Yet?
Kurt Brouwer April 30th, 2008
The economy limped along in the first three months of the year, growing at a rate of 0.6%. If that sounds like a slowdown, it is. In fact, it was the same modest growth rate we saw in the fourth quarter of 2007. Though this rate of growth is nothing to brag about, it is still positive. That is, we are not in a recession yet — at least, as long as these numbers hold up. The U.S. Department of Commerce is famous for revising GDP statistics, so it remains to be seen whether or not this number gets changed. Nonetheless, this report indicates we are not in a recession now [emphasis added]:
Economy Expands 0.6% In First Quarter (Associated Press - Fox News, April 30, 2008)
The bruised economy limped through the first quarter of this year at only 0.6% as housing and credit problems forced people and businesses alike to hunker down.
The country’s economic growth during January through March was the same as in the final three months of last year, the Commerce Department reported Wednesday.
The statistic did not meet what economists consider the classic definition of a recession, which is a retraction of the economy. This means that although the economy is stuck in a rut, it is still managing to grow, even if modestly.
…Earlier this year, some economists thought the economy would actually lurch into reverse during the opening quarter. Now, they say they believe that will likely happen during the current April-to-June period.
Gross domestic product measures the value of all goods and services produced within the United States and is the best measure of the country’s economic health…
This is an odd environment and today’s report just continues the trend. Clearly, some industries such as housing and finance have hit the wall. For them, it is clearly a negative economic environment. But, overall the economy just gimps along. You will hear the R word — recession — over and over again in coming months because we are in the middle of a presidential campaign. However, the signs are that the economy is slowing, but has not yet gone negative enough to warrant the proper use of the term recession.
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