Call a Recession a Recession
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Are we allowed to call it a recession yet?
President Bush and his administration certainly don’t think so. Fox News isn’t calling it that yet. But I’m one of those people who believe that if it looks like a duck, walks like a duck and quacks like a duck, you really ought to call it a duck!
Not being an economist, though, I defer to those with far more expertise, such as the National Bureau of Economic Research (NBER), a century-old nonpartisan group employing sixteen winners of the Nobel Prize for economics. The NBER defines a recession as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales” (NBER.org, 2003).
Okay, so GDP or gross domestic product is determined by: GDP = consumption + gross investment + government spending + (exports − imports). I’ll be really honest here: I don’t understand much of that. I do know that our stock market is in a shambles right now, though. My husband’s 401(k) has been cut almost in half, and he finally yanked it out of stocks and put all of it into bonds. That sounds like an investment problem to me. I’m sure government spending’s still through the roof as it has been for the entire Bush administration, but it doesn’t appear to be enough to rock that formula. The Commerce Department reported yesterday that our trade deficit increased for the second straight month, and even the most optimistic analysts are starting to waiver a bit (Associated Press, 4/11/08).
Alright, so how about “real income?” Real income is defined as “income of an individual or group after taking into consideration the effects of inflation on purchasing power” (financial-dictionary/thefreedictionary.com). According to the Christian Science Monitor, “Inflation is a global phenomenon this year” (4/11/08). No kidding. My husband got a 3% raise last month; his company, United Health Group, had capped all raises at 3% even though they made a profit of about $6 billion last year. The 3% raise will cover our gas to get to and from work each month.
Employment? Good news there? Again, I’m not an economist. Government officials and the media play fast and loose with unemployment statistics; one person says they’re up, and another says they’re down. Here’s what I do know: ATA closed its doors last week. Frontier Airlines just filed for bankruptcy. General Motors is closing several of its plants; Chrysler is idling some its plants and forcing employees to take vacation time. Sprint is laying off 4,000 of its employees. Those are some big companies getting rid of a lot of jobs. It doesn’t sound good.
I’m not even going to touch industrial production since I have no idea what that means!
Retail sales, though, I understand, having worked in retail for over 10 years. According to the national retailers’ reports, sales were down .5% in March, reaching their lowest point in 13 years (The Record, 4/11/08). The holidays weren’t great for retailers either. From my many students and friends who currently work in retail, I can tell you most stores weren’t hitting their sales goals. According to the International Council of Shopping Centers, holiday sales for shopping malls in 2007 were the weakest in 11 years.
I was surprised that housing sales weren’t included in the recession definition. To me, housing seems like a logical element to affect the country’s economic health. Everyone knows the housing market and mortgage industry are in a huge mess. The house next door is in foreclosure; my neighbors packed up and left in the middle of the night. My former boss had to transfer to Alabama, and she and her husband lost tens of thousands of dollars on their home.
But even without the housing data, the nation is OBVIOUSLY in a recession. Consumers already know it which is why consumer confidence is at a 26-year low (Reuters, 4/11/08). Why can’t we just call it what it is? I guess using the actual word would be an admission that the old Republican economic policies just don’t work. Surely I am not the only one who recognizes that after several years of Republican economics, our country always ends up in a recession?
Many of my conservative friends and family members refuse to believe we’re in a recession. They are, generally, well off and lucky enough not to have been directly affected yet. They haven’t lost their jobs, their homes, or much of their disposable income. I’m happy for them; really, I am. But just because you’re not hungry doesn’t mean everyone around you isn’t starving to death. The Marie Antoinette act is getting old, folks.
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