recessions are not a normal part of the economic cycle"
Most human activities and natural activities are cyclic. Denying this doesn't make it not so, any more than cutting taxes ALWAYS results in increased government revenues. Recessions follow periods of "irrational exhubrance". During the Clinton years, that meant tech investing. In the Bush years, it's been centered in residential RE, which is in the process of correcting now.
First of all, only a minority portion of the US housing market has shown irrational exurberance......roughly the east and west coasts. The rest of the country's housing markets have been marked by slow growth or "irrational depression". So at best we have a partial bubble.
Secondly, housing does not have the liquidity that stocks do.
So if there is a partial bubble, it will be forced to deflate much more slowly than stocks.
Go with the flow dude! I get the feeling you PERSONALLY would rather not have a recession right now...but we don't get to pick 'em - just try to predict 'em.
On the contrary, I'm afraid that its you who is showing a bias.......you've decided that we are about to have a recession and so it must be. Under Bush, I expect a recession at almost any time. However, I do pay attention to key economic statistics and they don't suggest a recession is imminent. So if the statistics contradict, I pay attention to them and put my 'irrational' bias asside.
What goes up must come down: Periodic recessions are a natural part of any nation's economic cycle."
"Spotting a Recession
In the United States, the economy follows a somewhat regular pattern of expansion and contraction. The economy will typically expand steadily for six to 10 years and then enter a recession for six months to two years. The point where the recession begins is known as a peak, and the point where it ends as known as a trough. Following the trough, the economy expands again toward another peak. Economists call the period of time between two peaks a business cycle."
Let me just say that Clinton's expansion refuted many common beliefs held by economists. For an example, most economists pre Clinton thought that 4-6% unemployment meant full employment; that unemployment could never get below 5% except temporarily due to extraordinary conditions.
However, thinking that a recession must follow an expansion is half the battle.....believing that something is true often times will make it happen. Slowly ever so slowly, that belief is changing.........we are beginning to realize that one thing doesn't have to follow the other. Just for the record.......Seattle did not have a recession from 1980 to 2000. That's in spite of the fact that the country had how many recessions during that same time period? |
