"Recession? Depends on your outlook" - Aaron London -
You say moderation, I say recession. Is it apples and oranges or is it time for a new perspective?
The moderate economic growth the Federal Reserve Board and others have been preaching seems to have moderated a bit more than expected.
The latest gross domestic product report shows the U.S. economy has slowed to a molasses-in-winter pace of 0.6 percent, which is a downward revision from earlier estimations of a blazing 1.3 percent growth rate.
That follows the stunning 2.5 percent growth rate the U.S. economy posted in the fourth quarter of 2006. If this is moderation, I would hate to see what a real slowdown looks like.
Realistically, any hope of some kind of moderate economic growth through the rest of 2007 -- leading to stronger growth in 2008 -- is as much of a pipe dream now as the Chicago Cubs making a run for the National League pennant.
In fact, the latest GDP report shows the U.S. economy has entered a recessionary phase. While the traditional measure of a recession is two consecutive quarters of negative GDP growth, the reality is that anything under 1.5 percent should be considered at least on the cusp of a recession, if not recessionary.
If the U.S. economy has become some kind of "New Economy," as it was supposed to have done sometime in the late 1990s, then the old measures of economic success or failure need to be recalibrated. And the first one that needs updating is the what constitutes a recession.
With apologies to comedian Jeff Foxworthy and his help in determining what constitutes a redneck, maybe it's time to figure out how to spot a recession when it's staring you in the face.
If energy costs continue to put pressure on consumer spending, you might be in a recession.
If policymakers continue to grasp at economic straws looking for signs of "moderation" in the economy, you might be in a recession.
If a major sector of the economy goes from slowdown to tailspin to still not at the bottom, you might be in a recession.
If inflationary pressures continue to give consumers the heebie-jeebies and policymakers nightmares, you might be in a recession.
If the job market resembles the newest roller-coaster ride at a theme park, you might be in a recession.
If GDP "growth" comes in smaller and smaller increments, you might be in a recession.
If consumers are locking up their wallets and battening down the economic and financial hatches, you might be in a recession.
For most of us, higher gasoline prices -- now beginning to affect other goods and services -- are just the harbinger of what looks to be tougher economic times ahead.
With a long, hot season just beginning and energy prices still climbing, this just may end up being a summer of discontent for consumers. Those unhappy consumers will lead to unhappy retailers -- and even lower GDP numbers in the months ahead. That could make a recession a reality on any measurement scale. And that is nothing to laugh at.
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