quote:

Originally posted by Local Hero:
I do remember you claiming that sour financial news articles in February, caused the housing market to decline last year, and that people reading them would be shocked into spending freezes, making the recession deepen.

Not quite what I said.
I did not link the current spate of fear mongering economic news to the housing market decline already underway. I linked the fear news to generally worsening the overall economy and potentially pushing a weak economy into a recession.
Fear drives the economic markets. Right now not only are the average people afraid, but the big money networks are too. That last one is what is new here - new at least in terms of the lifetimes of most of the people reading this forum. The extent of any downturn will be linked to the fear in the big money circles. If they can be calmed and return to playing nicely with eachother, then we should see some stability and possibly some growth by the end of the year.

Well, KK, apparently you and I are not average.... neither of us is living in fear

I know I will probably get dumped on for daring to post something on this forum that was found on Fox, but here it is anyway....

The 'Recession' Is a Media Myth

Tuesday, April 01, 2008

By John R. Lott, Jr.
FoxNews

During the 2000 election, with Bill Clinton as president, the economy was viewed through rose-colored glasses. According to polls, voters didn’t realize that the country was in a recession. Although the economy started shrinking in July 2000, most Americans through the entire year thought that the economy was fine.

But over the last half-year, the media and politicians have said we were in a recession even while the economy was still growing.

Gas prices are going up. The economy is slowing. Talk of recession is seemingly everywhere. While the majority of people rate their personal finances positively, consumer confidence in the economy has plunged to a 16-year low, well below what it was during the last year of the Clinton administration when we were in a recession.

A Nexis search on news stories during the three-month period from July 2000 through September 2000 using the keywords “economy recession US” produces 1,388. By contrast, the same search over just the last month finds 3,166. Or, even more telling, take the three months from July through September last year, when the GDP was growing at a phenomenal 4.9 percent. The same type of Google search shows 2,475 news stories.

A little perspective on the economy would be helpful. The average unemployment rate during President Clinton was 5.2 percent. The average under President George W. Bush is just slightly below 5.2. The current unemployment rate is 4.8 percent, almost half a percentage point lower than these averages.

The average inflation rate under Clinton was 2.6 percent, under Bush it is 2.7 percent. Indeed, one has to go back to the Kennedy administration to find a lower average rate. True the inflation rate over the last year has gone up to 4 percent, but that is still lower than the average inflation rate under all the presidents from Nixon through Bush’s father.

Gas prices are indeed up 33 percent over the last year, but to get an average of 4 percent means that lots of other prices must have stayed the same or gone down. On other fronts, seasonally adjusted civilian employment is 650,000 people greater than it was a year ago. Personal income grew at a strong half of one percent in just February.

Despite all that, this last week, Barack Obama proclaimed “As most experts know, our economy is in a recession.” Hillary Clinton made similar staements last fall. Yet, as any economist knows, a recession is two consecutive quarters of negative growth, and we haven’t even had one single quarter of negative growth reported. The economy slowed down significantly during the end of last year, but that was after a sizzling annual GDP growth rate of 4.9 percent in the third quarter.

Housing has obviously been a big drag on the economy, but many other sectors of the economy, such as exports, have been doing well, some extremely well. For example, aerospace exports increased by over 13 percent last year.

The media’s focus on the negative side of everything surely helps explain people’s pessimism. In a recent interview Fox’s Neil Cavuto claimed this bias “is all part of the media’s plan to get a Democrat in the White House.”

Indeed, research has indicated that media bias is real. Kevin Hassett and I looked at 12,620 newspaper and wire service headlines from 1985 through 2004 for stories on the release of official government releasing numbers on the unemployment rate, number of people employed, gross domestic product (GDP), retail sales, and durable goods.

Even after accounting for how well the economy was doing (e.g., what the unemployment rate was and whether it was going up or down), there was still a big difference in how positive or negative the headlines were. Democratic presidents got about 15 percent more positive headlines than Republicans for the same economic news.

Yet, the hysteria created by this coverage can have another cost. It creates pressure for government to “do something,” even if that rush to do something actually ends up hurting the economy. For example, Obama's promises last week “to amend our bankruptcy laws so families aren't forced to stick to the terms of a home loan” will only further drive down the value of mortgage-backed securities, making any unstable financial institutions that hold them even more likely to fail. In the long term, who is going to want to loan money when the contract can be rewritten at a later date?

The news media have generated a lot of fear. Ben Stein has a point when he says “The actual economic conditions are not that bad. I think if we have a recession, if we have a serious recession, a great deal will lie at the media’s feet.” Hopefully a little perspective will enter the picture before even more harm is done.

John Lott is the author of Freedomnomics and a senior research scientist at the University of Maryland.

quote:

..........Originally posted by King Kong:
By John R. Lott, Jr.
FoxNews
During the 2000 election, with Bill Clinton as president............

We should really try to find a way to get Fed Chairman Bernanke, and Sec of Treasury Paulson to read more Fox news opinion peices. (Especially that former Nixon/Ford speechwriter Stein)
As it stands today, Bernanke and crew are 400 Billion into assorted bailouts that will likely be near a trillion before the dust settles.
Paulson is calling for the most sweeping government regulation/control changes since the Depression era just the other day, too.
Will you handle sending the story link to Ben and Hank, if I'll handle sending the NBER data to Neil Cavuto and Co?

Market News:

Dow down at triple digits at midday.

General Electric shocks the market

No-down-payment mortgages gone for good?

Credit crisis overshadows dollar

Housing pain continues to spread

Consumer sentiment plunges to 26-year-low
By Ruth Mantell,

WASHINGTON MarketWatch -- Consumer sentiment sunk to its lowest level in 26 years in early April, according to a report on Friday from University of Michigan/Reuters, as worries about the economy, unemployment and inflation deflated hopes for future.

U.S. consumer sentiment index fell to 63.2 in early April from 69.5 in March. Sentiment is at its lowest level since March 1982. Economists surveyed by MarketWatch were looking for an April result of 68.8.

The expectations index fell to 53.4 in April -- the lowest since November 1990 -- from 60.1 in March, noted Ian Shepherdson, chief U.S. economist at High Frequency Economics. There's no sign that confidence bottomed out yet, he said.

"If sustained at this level, the index is consistent with a 0.5% year-over-year rate of outright decline in real consumption," Shepherdson wrote. "Bearing in mind that more than half of all consumption is non-discretionary (food, energy, housing, etc) this means discretionary spending will fall at a 1% rate or more, something we haven't seen since 1991."

Consumers have been more cautious about spending, according to recent confidence readings. Last month, after reporting a drop in consumer sentiment, Richard Curtin, the director of the survey, said a recession has occurred whenever the index has declined as much as it has fallen during the past year.

The current conditions index fell to 78.4 in April from 84.2 in March. The one-year inflation expectation rose to 4.8% from 4.3%.

"One-year inflation expectations have moved above the post-Katrina spike to the highest levels seen since 1982," wrote John Ryding, U.S. chief economist for Bear Stearns.

Elsewhere Friday, the Labor Department reported that a surge in prices for imported petroleum pushed prices of goods imported into the U.S. higher by 2.8% in March, the most since November 2007.

Ruth Mantell is a MarketWatch reporter based in Washington.

Like several of the previous posters, I must not be average. Life seems good. House is paid for ( not brand new but nice.). Fairly new car...not paid for but my only debt. I work for a decent company with average bennies. Don't have all the latest electronic gizmos but stay entertained.

I guess I'm not "getting" the point of this tread. People got problems, but some people always got problems. People usually cope and find a way to make the best of things. This tread seems to be a rehash of some "talking head experts" telling you how bad things are. I guess you can wring your hands and cry woe is me like the local zero, but most people I know are doing what it takes to make ends meet and are enjoying life as much as they can with what they do have. People with a positive outlook find lots of pleasure in the world. If you dwell on negative side of things all the time, life will certainly appear to be really bad.

thank you poppy, that is what I've been trying to say

Market news

Turmoil creates formidable 'to-do list,' Kohn says
Fed vice chairman notes 'major weaknesses' in U.S. financial system

By Greg Robb,

WASHINGTON MarketWatch -- The ongoing turmoil in financial markets has "revealed major weaknesses" in the U.S. financial system that need urgent attention from the private sector and regulators, Federal Reserve Vice-Chairman Donald Kohn said Thursday.
In order for a safer, more resilient financial system to emerge, commercial banks should consider raising more capital, and investment banks must come up with plans in case their access to short-term funding is impaired.
Banks must also improve their risk management and counterparty-risk practices. Regulators have to come up with rules to guard against excessive reliance on the Fed as a lender of last resort.
"I acknowledge that this is a formidable "to do" list," Kohn said. "But it has been a formidable episode of financial turbulence that has revealed major weaknesses in our financial turbulence that has revealed major weaknesses in our financial system," he said.
Kohn agreed with many commentators that the roots of the current crisis lie back in the 1990s when Congress tore down the walls separating investment banks from commercial banks.
The most dramatic changes occurred at the very largest U.S. banks, Kohn said. These banks began to act more like securities firms than traditional banks, moving into securitization, derivative trading, and financing of hedge funds.
"Together the very large commercial and investment banks have become indispensable to the efficiency and stability of the securities markets," Kohn said.
But this is one of the reasons that the current financial turmoil is so severe, he said. In past banking crises, U.S. businesses could access the equity market for capital.
Bank management didn't stay on top of things, says Kohn
The current crisis has shown that bank managements were not up to some of the challenges, Kohn said.
"I believe it is fair to say that the creation of new, innovative financial products outstripped banks' risk-management capabilities," he said.
In addition, banks did not have a grasp of the reputation risks of providing services to hedge funds.
And banks did not a firm handle on the management of counterparty risks.
As big banks concentrated of securitization, small banks have gravitated toward commercial real estate lending because these loans defy securitization, Kohn said.
But this concentration carries its own risks in weak economic conditions, Kohn said.
For commercial and investment banks, robust contingency plans need to be developed for situations in which their access to short-term secured funding also becomes impaired, Kohn said.
This will likely entail more costly funding and therefore less leverage in the system.
"But a financial system with less leverage at its core will be a more stable and resilient system, and recent experience has driven home the very real costs of financial instability," Kohn said.
Greg Robb is a senior reporter for MarketWatch in Washington.


Hedge-fund managers get biggest payday in history
Magazine says 'subprime shorter' Paulson beat out Soros for most earned

By Rex Nutting,

AMMAN, Jordan MarketWatch -- Top hedge-fund managers had the greatest payday in the modern history of finance during 2007, according to Institutional Investor's Alpha magazine.
The publication released its seventh annual ranking of the top-paid managers on Wednesday.
The top spot in Alpha's 2007 rankings went to John Paulson of Paulson & Co., who took in a record $3.7 billion. Paulson gained attention by his investment strategy to short the subprime mortgage market.
According to Alpha, the top 25 managers averaged $892 million in earnings, up 68% from the $532 million they earned on average in 2006. Five managers earned more than $1.5 billion -- a reflection of how much the industry has grown and how much money was to be made in high-powered finance, even in a year of crisis.
The magazine counted managers' share of fees plus gains on their own capital but excluded money that some managers made by selling their firms or taking them public. The managers typically take 2% of the assets under management as a fee, plus 20% of the profits of the fund.
The magazine said "the greatest display of individual wealth creation in any year in the modern history of finance" would likely spur a "heightened level of envy and resentment" toward the funds, in light of the rising number of home foreclosures.
Just the day before, the U.S. Treasury and the hedge-fund industry announced a voluntary plan to increase disclosures by hedge funds in an effort to ward off any move toward greater government supervision.
The top spot in Alpha's 2007 rankings went to John Paulson of Paulson & Co., who earned a record $3.7 billion by shorting the subprime mortgage market.
Following Paulson, the top five managers as ranked by Alpha were: George Soros of Soros Fund Management, who earned $2.9 billion; James Simons of Renaissance Technologies Corp., $2.8 billion; Philip Falcone of Harbinger Capital Partners, $1.7 billion; and Kenneth Griffin of Citadel Investment Group, $1.5 billion.
It took $360 million in earnings to crack the top 25 last year -- but just $30 million in the first ranking in 2002, the magazine said. Five of 2006's top 25 didn't make the list in 2007.
Rex Nutting is Washington bureau chief of MarketWatch.

1 in 33 Homeowners Projected To Be In Foreclosure Within The Next Two Years

Pew Press Release

Jeremy Ratner, 202.552.2137

Washington, DC - 04/16/2008 - One in 33 homeowners is projected to be in foreclosure primarily over the next two years, as a result of subprime loans made in 2005 and 2006, according to a new report released today by The Pew Charitable Trusts. In some states, the outlook is especially grim; for instance, nearly one in 11 homeowners in Nevada is projected to be in foreclosure and one in 18 Arizona homeowners may face the same circumstance over the next two years.

Homeowners being foreclosed upon may not be the only homeowners affected, according to data cited in the report. An additional 40 million neighboring homeowners may see their property values and their municipalities’ tax bases drop by as much as $356 billion, largely over the next two years.

Defaulting on the Dream: States Respond to America’s Foreclosure Crisis is the first-ever, comprehensive look at what all 50 states and the District of Columbia are doing to try to address the subprime mortgage fallout. The report finds that more often than not, states are at the forefront of developing policies and programs aimed at preventing more irresponsible loans from being made and improving residents’ ability to stay in their homes. The report highlights states that are making headway to strengthen loan underwriting standards and help borrowers avoid foreclosure—and underscores that any federal legislation must complement the work being done in the states, not compromise it.

The report is a joint effort between the Pew Center on the States and Pew’s Health and Human Services Program.

For Iowa:

quote:

Originally posted by Poppy:
Like several of the previous posters, I must not be average. Life seems good. House is paid for ( not brand new but nice.). Fairly new car...not paid for but my only debt. I work for a decent company with average bennies. Don't have all the latest electronic gizmos but stay entertained.

I guess I'm not "getting" the point of this tread. People got problems, but some people always got problems. People usually cope and find a way to make the best of things. This tread seems to be a rehash of some "talking head experts" telling you how bad things are. I guess you can wring your hands and cry woe is me like the local zero, but most people I know are doing what it takes to make ends meet and are enjoying life as much as they can with what they do have. People with a positive outlook find lots of pleasure in the world. If you dwell on negative side of things all the time, life will certainly appear to be really bad.

well said Poppy, some folks choose to be negative, cynical, and unhappy and don't seem able to do anything about it, cheers!

In the words of Tanya Tucker:


Late one night, I heard a knock on my door,
No surprise, it was my landlord.
Notified me I was late with the rent.
What can you do when your last dollar's spent,
You got trouble.
Some kind of trouble.

I called up my baby for a little advice,
'Cos my sugar baby always treats me so nice.
I had a funny feelin' that he wasn't alone,
I heard another voice whisper: "Hang up the 'phone."
I got trouble.
Some kind of trouble.

Trouble in my heart, trouble on my mind,
There's never any trouble for me to find,
Some kind of trouble.(Some kind of trouble.)

I went to my boss, said: "I need a little time.
"To work on this poor broken heart of mine."
He said: "I'd like to help you, I been there before.
"The problem is, girl, you don't work here no more.
"You got trouble."
"Some kind of trouble."

Trouble in my heart, trouble on my mind,
There's never any trouble for me to find,
Some kind of trouble. (Oooh, some kind of trouble.)

I got trouble.

I was down around as low as a body can be,
So I talked to my preacher about prayin' for me.
He smiled and he said: "Child, you're not alone.
"'Cos all God's children got to deal with their own,
"Kinda Trouble.
"Some kind of trouble."

Trouble in my heart, trouble on my mind,
There's never any trouble for me to find,
Some kind of trouble. (Oooh, some kind of trouble.)

Some kind of trouble. (Oooh, some kind of trouble.)
Trouble in my heart.
Trouble on my mind. (Oooh, some kind of trouble.)
Trouble, any trouble,
For me to find. (Oooh, some kind of trouble.)

From CNNMoney:

The Federal Reserve cut the fed funds rate, a key overnight bank lending rate, by a quarter-percentage point to 2%, as expected. In its closely-watched statement, the central bank indicated that the economic outlook is not as dour as it has been recently and that its rate-cutting campaign could soon take a breather.

The announcement fulfilled expectations that some inflationary concerns are creeping in, said Steven Goldman, market strategist at Weeden & Co. But it also indicated that the bankers think the economy is starting to or will soon start to respond favorably to the series of cuts already in place, he said. As a result, "this may be the last cut for the foreseeable future,' he said.

The recent rally in stocks over the last month suggests that the equity market is looking ahead and anticipating a better environment. "Hopefully, upcoming economic news will reflect that optimism," Goldman said.


GDP: Gross domestic product grew at an 0.6% annual rate in the first quarter, as it did in the final quarter of 2007. That was slightly better than the 0.5% rate expected by economists, yet confirmed that the economy remains in a period of sluggish growth.

Another better sign for the economy came from payroll services firm ADP, which reported a surprise rise in private sector employment in April. Employment rose 10,000 versus forecasts for a decline of 60,000. That could be a positive indication ahead of Friday's more closely-watched government jobs report.

great satire,there,local hero,about everyone watching Neil Cavuto and the other yapping no-nothings at Fox ,lol .... nobody takes Fox News seriously,it`s a white house propaganda machine,featuring such unbiased comment from such tools as Karl Rove,Ralph"Abramoff"Reed, Bill"20 million to buy off a sex harrassment charge" O`Reilly,Tom Delay,ad nauseum
How classy and knowledgeable are those dimwits at Fox? The other day,when talking about Bilary wanting to challenge Obama to a debate ala Douglas- Lincoln, they put a picture of of Lincoln and ...famous black orator Frederick Douglas,not the lilly-white Stephen F. Douglas. Just shoddy on every front,and spoon-feeding nitwits with their faux journalism.What a joke.There are no Edward Murrows or Walter Cronkites or Harry Smiths at Fox. Nor will there ever be.Now those guys were what are called Journalists.Fox is a cultural desert.

Forecasters see weak economy, higher unemployment
By JEANNINE AVERSA, AP Economics Writer

First the good news: The worst of the painful housing slump and the credit crunch might come to an end this year. Now the bad: The economy will weaken further and unemployment will rise.
That's the latest outlook from forecasters in a survey to be released Monday by the National Association for Business Economics, also known by its acronym NABE. It will take time for any rays of light to poke through the economic clouds, though.
A growing number of economists believe the country is on the brink of a recession or in one already, dragged down by all the problems in housing, credit and financial markets. Now 56 percent of the economists think the economy has started or will enter a recession this year. That's up from 45 percent in a survey in February. If there is a recession, it probably will be short and shallow, economists said.
Forecasters downgraded their projections for economic growth. They now predict the economy, which grew by 2.2 percent last year, will slow to 1.4 percent this year. That's lower than the 1.8 percent growth projected in February. If the new figure proves correct, it would mark the weakest growth since the last recession in 2001.
Next year, the economy should grow by 2.3 percent, less than previously forecast and a pace that is still considered subpar.
"Although housing and credit markets will gradually loosen their grip, U.S economic growth is expected to only slowly return to health," said Ellen Hughes-Cromwick, president of NABE and chief economist at Ford Motor Co.
Given the outlook for sluggish overall economic activity, companies are likely to remain cautious in their spending and hiring.
The unemployment rate, which averaged 4.6 percent last year, will move higher. Forecasters predict the jobless rate will hit 5.3 percent this year and 5.6 percent next year.
Forecasters are hopeful that the housing slump — in terms of home sales — will hit bottom this year. However, economists were divided over whether the low point would be reached in the second, third or fourth quarters of this year. House prices, though, are still expected to drop this year and next.
On the credit front, economists predict conditions will improve in the second half of this year.
"The economy is still going to be weak in the very near term, but the worst is likely to end this year with respect to the housing decline and the credit crunch," said Lynn Reaser, chief economist at Bank of America's Investment Strategies Group, who was involved in the NABE survey. The survey of 52 forecasters was conducted April 17 through May 1.
Weakness in housing was cited as the factor most responsible for the economy's troubles. That was closely followed by credit problems and high energy, food and commodity prices.
With food prices marching upward, gasoline prices closing in on $4 a gallon nationwide and oil hitting a record high near $128 a barrel, inflation should rise. Consumer prices will increase 3.6 percent this year, up from a previous forecast of a 3 percent rise. Next year, prices should calm down a bit, with the inflation rate clocking in at 2.4 percent.
To bolster the economy, the Federal Reserve has been cutting a key interest rate since last September. However, when the Fed last lowered rates, in April to 2 percent, policymakers signaled that their rate-cutting campaign may be drawing to a close. Fed policymakers are concerned that moving rates lower could aggravate inflation. At the same time, they are hopeful that their powerful rate cuts plus the government's $168 billion stimulus package of tax rebates for people and tax breaks for businesses will lift the country out of its slump.
The forecasters believe the Fed will hold its key rate steady at 2 percent though the rest of this year. However, they predict the Fed will start bumping up rates next year to ward off inflation. They believe the Fed's key rate will rise to 3 percent by the end of 2009.
Economists, meanwhile, had mixed thoughts about the extent to which tax rebates will be spent this year. The more spent, the more energizing effect they will have on the economy. Roughly 35 percent thought households will spend 26 to 50 percent of the rebates, while a quarter believe 25 percent or less would be spent. Thirty-one percent thought 51 to 75 percent would be spent.
"We're likely to see the boost from tax rebates fading later in the year," Reaser predicted. "The recovery is expected to be quite muted."

Recession in America May 19, 2008, 12:01AM EST

Why So Long to Call a Recession?
The independent National Bureau of Economic Research is the official arbiter of economic downturns. But it takes its time.

by Tim Catts

Editor's note: This is the first in a series of stories that will look at how the economic downturn is affecting individuals throughout the country.

Robert E. Hall doesn't make predictions, at least not about the state of the economy. Hall is the Stanford University economist who chairs the committee charged with identifying when recessions begin and end. Over lunch at a sunny café on the school's Mediterranean-style campus in Palo Alto, Calif., he explains it's much too early to determine whether the current slump merits the "R" word. "All the members of the committee agree we're far from a decision point," he says. Until much more evidence comes in, he prefers to call this an "experience."
It certainly is an experience for most Americans. Home prices tumble month after month. Food prices surge. Gas prices are approaching $4 a gallon. And the job market is getting rough. Given the evidence they see with their own eyes, most Americans believe the downturn is plenty clear. A recent survey by CNN and polling firm Opinion Research found that 4 in 5 people think the economy is already in recession.
But the recession won't be official until Hall and his colleagues at the National Bureau of Economic Research say so. The NBER has been the recognized authority on dating downturns since 1961, when the U.S. Commerce Dept. began including the bureau's business cycle data in government publications. Today the NBER's business cycle dating committee has seven members, including Hall and Harvard economics professor and NBER President Martin Feldstein. The NBER is a nonprofit research group that operates independent of the government.
Ivory Tower Pace
Many people think the definition of a recession is two consecutive quarters of decline in the gross domestic product. But that's a misperception. Hall and his colleagues will look beyond such simple metrics, weighing monthly GDP estimates, employment data, income, industrial production, and other factors. To call a recession, they'll look for clear signs of "a significant decline in economic activity spread across the economy, lasting more than a few months."
Any call, if it comes, is going to take a while. The NBER usually takes 6 to 18 months to decide when a recession starts or ends. Hall's committee didn't announce the end of the 2001 recession until a full 20 months after the fact.
Should they move faster? Some critics think so. This measured, academic approach is in sharp contrast to the daily lives of most Americans. While Hall and his colleagues pore over spreadsheets and statistics, most people see the economy's troubles every day, in the cost of a tank of gas, the drop in home prices, or the layoffs of a friend, neighbor, or spouse.
Members of the business cycle dating committee hail from prestigious academic institutions, from Stanford to Northwestern to Harvard. Their worlds are well-insulated from the worst of the economic troubles. On such exclusive campuses, there aren't homes foreclosed, businesses shuttered, or people homeless.
Waiting for Reliable Data
Hall has heard all of the questions before. He's 64 and has chaired the dating committee since it was formed in 1978. After lunch, as a soft breeze tousles his gray hair and the midday sun glints off his metal-frame glasses, he explains there are good reasons for his group's deliberate pace. First, the committee exists to identify periods of economic expansion and contraction for the historical record, not to comment on them while they're taking place. They're also not involved in policymaking, so whether they call a recession or not has nothing to do with the actions Washington may take to address problems in housing or gas prices.
More immediately, sure signs of a recession, as Hall's committee defines it, aren't yet evident in the government's official economic data. Yes, Wall Street firms like Merrill Lynch and Citigroup have written off billions, and Main Street is struggling with housing and gas problems. But the distress hasn't translated into declining GDP.
Government figures show the economy expanded by 0.6% in each of the last two quarters. The first-quarter GDP data announced at the end of April are preliminary and are likely to be revised, which means it's possible they could turn into negative territory. Waiting for reliable data is one of the main reasons it can take so long to identify a recession's beginning and end.
Hall and his colleagues have plenty of experience in the field. Since the business cycle dating committee was established, they've called four U.S. recessions. The longest ran from July, 1981, until November, 1982. The highest unemployment rate during any of the four downturns came during the one a quarter-century ago, when the rate hit 10.8%. The country is far from that level now, with unemployment at 5.0% in April, according to the federal government's Bureau of Labor Statistics.
No Definitive Consensus
Hall says he's a hands-off manager of the process of identifying recessions. "These aren't people who can be directed," says Hall of the committee members. "These are people with a lot of expertise and awareness of what's happened in the past, but it's not a group that has a lot of disagreement." Discussion takes place by e-mail and frequently revolves around a mid-month message Hall sends to committee members containing economic data, including the monthly estimate of GDP growth, as calculated by the St. Louis consulting firm Macroeconomic Advisers.
The committee's other members aren't as reluctant as Hall to discuss whether a recession is here, and parsing all this data has led them to take differing stances on that point. Feldstein wrote in an opinion piece in the Financial Times last week that the reported growth of 0.6% in GDP during the first quarter was "very misleading" and that monthly data indicate the economy has shrunk since the beginning of 2008. Meanwhile, Edward Lazear, an NBER member on leave from the organization while he chairs the White House's Council of Economic Advisers, told a meeting of Wall Street Journal journalists that "the data are pretty clear we're not in a recession."
Hall chooses not to wade into the debate because "the chairman of a group like this ought to be more neutral," he says. The committee's members share a broad consensus about the economic conditions that constitute a recession, he says, and even if they disagree today about whether one is here or will soon arrive, they'll be able to agree when all the data is in.
"Both positions are tenable given the uncertainty," says Hall. "Wait for a bit and all will come into focus."
Catts is a reporter for BusinessWeek.com.