Recession Two consecutive quarters of decline in real GDP is commonly taken to be a recession. The National Bureau of Economic Research, a private organization, effectively decides when recessions occur, however, and the actual dating process is determined by judgment rather than a formal rule.
So which is it? Is there a firm definition, or is it completely up to judgment? I’d say both. Examining the clinical data, according to the BEA:
- 2007 Q4 GDP — 0.6%
- 2007 Q3 GDP — 4.9%
- 2007 Q2 GDP — 3.8%
That doesn’t look like the classical definition of a recession to me. It looks like growth of the GDP is slowing, but not in decline. The economy is still growing, just not as fast. It’s very interesting that you hear so much about us being in a recession, or headed for a recession, or whatever. It’s almost as though someone is trying to convince us that there is a recession, huh? I think that’s where judgment perception comes in. It seems as though we are in a recession, mostly because everyone perceives we are. And that’s probably the only thing that really matters. I just hope that no one is using that perception for something like political gain.
Nah, that would never happen.
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