Recession? Not Yet.

By Alan Stewart Carl | Related entries in Economy

Despite all the economic doom and gloom, we’re actually not in a recession. Turns out, the economy grew 0.6% last quarter. A recession is when the gross domestic product (GDP) goes into the red for two consecutive quarters.

Of course, 0.6% growth is only good news when you’re expecting negative growth. The economy’s growth in the final quarter of last year was also just 0.6% which means, while we’re not in a recession, our economy is stagnating. Our economy is struggling with the bad housing market (the number of foreclosures increased for the seventh consecutive quarter) and slowing consumer spending due to declining consumer confidence (which is at a five year low).

Given the grim numbers, the fact that we aren’t actually in a recession is positive news and makes it more likely that we’ll get through this slump faster and with less overall pain than some have predicted. The last two quarters were filled with negativity and bad economic news yet the GDP still managed to eke into the black. My guess now is that, by the time the next president takes office, our economy will be on the rebound but economic conditions will still be the central issue of this campaign.


This entry was posted on Wednesday, April 30th, 2008 and is filed under Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

8 Responses to “Recession? Not Yet.”

  1. Avinash_Tyagi Says:

    Actually even if we aren’t tecnically in a recession, that doesn’t mean we will get through this that easily, the fed rate cutting was the reason we have been able to keep growth continuing, however that has triggered inflation in food and crude oil prices, however the Fed is still faced with dropping property values and rising foreclosures so whether they can stop cutting rates is anyone’s guess.

    I believe the better term for what we are experiencing is mild stagflation

  2. Erik Sickinger Says:

    I agree with the above poster regarding the reason for the slight growth. But at this point, cutting rates won’t positively impact the economy at all. The Fed has promoted that this more than likely will be their last rate cut for awhile – which prompted the recent strengthening of the USD, and lowered cost of oil.
    Look for the dollar to continue a slight increase in strength, but oil prices to rise slightly as we approach the summer months.
    On that note, looking at policy presented by Hillary and McCain, be prepared for a national movement to cut/eliminate the gas taxes on a federal and state level, which should ease the increase in prices at the pump.

  3. Erik Sickinger Says:

    BTW a stagnant economy + inflation = “stagflation” (not nearly as much fun as it sounds)

    Remember the last time we had that?

  4. ExiledIndependent Says:

    Not to nitpick, but recession is two consecutive quarters rather than months. One guy’s prediction: things bottom out in July, hold steady for about 4 months, then pick up slowly.

    Things could change more radically (based mostly on consumer confidence) if we would build another gasoline refinery here in the states and expand our domestic drilling. Of course, there’s a multi-year lag between when that is authorized and when it makes a real difference, but the psychological boost would have a real economic effect.

    Couple this with a Manhattan Project-style push for a viable alternative fuel (and its accompanying infrastructure) by 2018 and you have an America that becomes much more economically independent and can choose its interdepencies with other nations much more selectively.

    It’s time for America to return to a spirit of innovation and independence! USA! USA! USA!

  5. djthedj Says:

    You honestly believe any numbers that come from this administration? Wow, some people just never learn. The economy’s great, be sure to vote in McCain so we can finish off America once and for all, OK? Can you say bankrupt?

  6. Erik Sickinger Says:

    @dj:
    wait, wait. So you are suggesting that the COMMERCE department is lying on the GDP from last quarter?
    No one would ever say .6% was “great”
    All 3 candidates left will bankrupt us more, its not just McCain.

    Not everything the gov’t puts out is a GWBush lie.
    sheesh.

  7. Jim S Says:

    There are two things contributing to the increasing price of oil as much as supply and demand. These are rampant commodities speculation (Which is also a factor in the increase in food prices.) and the decreasing value of the dollar. And that had started before the Fed rate cuts.

    Food? Well, there’s corn going for ethanol. There’s the fact that oil is used in the production and transport of food. Did you know that Australia has been a huge exporter of rice? And right now they are in the middle of one of the worst droughts in modern history. And yes, there is that good old habit of futures speculation in a time when lots of money is pursuing the greatest return with absolutely no eye towards the underlying facts or stability. Can you say subprime mortgage parallels?

  8. Pseudo-Polymath » Blog Archive » Thursday Highlights Says:

    [...] Not technically a recession. [...]

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