Sunday, February 14, 2010

What is a recession anyway?

Politicians and economists who debated the possibility of recession in the United States for recent months. As you know, the president and the Congress approved a stimulus package of tax rebates prevention to reduce the impact of a possible recession. While the word "recession" is often used in public discourse, most Americans do not understand the meaning it. Unfortunately, this definition is elusive. There are two commonly accepted description of the retreat and sometimes conflict with one another.

Furthermore, one of the definitions are not clear by design. The traditional definition of a recession is two or more consecutive quarters of negative growth in real economy measured by gross domestic product (GDP). Prediction markets with meaning. Of course, it takes time to gather complete data. There are three separate iterations of quarterly GDP growth - two estimates followed by a number of "end". The final compilation was not released until almost three months after the end of the quarter being equal. Currently, overall economic growth is not taught to shrink. The first estimate of first quarter growth of real GDP growth was positive 0.6%. The analysis of these estimates are for the next week. For 1961, the U.S. government is recognized by the National Bureau of Economic Research (NBER) Business Cycle Dating Committee of the "official" Arbiter of shrink. This is a group of seven members of academic economists. NBER does not use any specific methods for determining the start and end dates of a recession - instead it looks different types of economic indicators in various stages of time and decided to declare that the economy is in recession, based on the data. This is the official policy of the NBER recession:

Recession is a significant decline in economic activity spread into the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, wholesale and retail stores.

NBER is very deliberate in his analysis under the data to avoid the need for change. His own policies are waiting "6-18 months" after the beginning of a retreat to declare that one has begun. In fact, they waited 20 months to announce the last recession officially ended in November 2001! Interestingly, the U.S. economy never actually had two consecutive quarters of falling GDP during 2000-2001. The NBER committee members can make things to express their own opinions. They are not restricted as government bureaucrats. Martin Feldstein, said in March that his "personal opinion" is that the U.S. is in recession. He reinforced the opinion just last week declaring that the recession would be "serious." In contrast, Edward Lazear, told a meeting of

Wall Street Journal journalistsst quarter outst quarter GDP is due to "the data is quite clear that we in a recession." Even the guys who should decide what a recession does not agree. Meanwhile, economic data offers a glimmer of hope. The trade deficit us are falling faster than expected and is likely to push up a change of 1 week. The consensus of economic experts that now is the GDP growth to 1% in fact 0.9. The release on Monday the main indicator of Economics for April also positive that it showed some improvement in conditions, the second consecutive monthly truck. A year's election, with anemic growth, labeling the U.S. economic situation will have to interpret needs immediate action. This business cycle is the NBER dating committee of the trial.