snousle

[eyeroll]

The Wikipedia article on the subject addresses how recessions are defined and declared.

It's not that easy to manipulate the definition of recession. The most one can do through manipulation would be to shift it back or forward in time a little - maybe a quarter or two. And frankly I see no reason to believe that happens.

But of course, if one wishes to dismiss even the most basic economic indicators as propaganda, then there is no reason to discuss them at all. You would have no basis for evaluating the economy whatsoever, whether positively or negatively.

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Oh, yeah, like any of us plebes have money to invest.

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Seriously. I have like $3.00 U.S. in my bank account right now, and no savings.

Edited Date: 2008-05-04 05:37 pm (UTC)

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Don't be too hard on albadger. His cynicism, given the current Orwellian doublespeak and crass propaganda that is going on in this culture -- the way the ruling class talks to the lower classes -- is understandable.

"Who gets to define recession?" is a perfectly reasonable question.

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jpeace.livejournal.com

I am investing heavily in corndogs and putting them in my mouth. It's a wonderful world.

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Yeah, it's a reasonable question. But I'm somewhat worked up on the subject these days, and conspiracy theories make me testy for various reasons.

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Sorry if this hit a sore spot.

Think of it as a thought experiment. I'm not actually suggesting people put money into a prediction market, although it would be a perfectly reasonable thing to do for some people. I'm trying to show the gap between rhetoric about the economy and the actual economy. And the gap between the media figures who talk about the economy and the people who take action based on their predictions.

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Naw, I'm just joking :)

I'm skeptical of the government's figures, though. How can you make sound judgments when your data is corrupted?
Check out this article on "Pollyanna Creep".

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tmaher.livejournal.com

I dismiss the Dow Jones average all the time - it's not accurately weighted like the NASDAQ composite or S&P 500 or anything else. Yet it's consistently cited as one of the most basic economic indicators, and certainly used in a propagandistic fashion.

May I continue to evaluate the economy?

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qnetter

The bottom line is that it doesn't matter whether or not we are in a recession. Growth has slowed so far that jobs, hours and wages are being lost. Whether we have .5% growth or .2% decline matters very little.

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Exactly. If "the numbers" were actually objective science, and not politically-motivated propaganda, I'd be much less skeptical. I agree with the article you link -- it's hard (if not impossible) for the average person to have a realistic view of things, when so much of the data is being "cooked" for political expediency.

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mellowtigger

Hey, cool. I'm 100x richer than somebody. (No savings, and about $300 in my checking account. Ignoring the $3000 debt on my credit card, of course.)

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So, part of the reason I'm a crank about the economy is that I'm ultimately of the school that believes that growth is unsustainable and that the right goal is to not just stop growth, but deliberately receede the whole economy to a sustainable level. I don't know if this is possible to do deliberately without massive carnage, but I am pretty sure that if it's imposed on the economy it would be worse than if it were planned. So from that perspective a recession could be interpreted as good news, although in practice people suffer.

So for the most part, I grudgingly accept the notion that growth is "desirable" at least in the short term. And I also recognize that per-capita, GDP may be falling. We are certanly near a recession, but even so, the anxiety I'm seeing in response to this is out of proportion to the magnitude of the problem.

I'm trying hard to avoid posturing arguments of "this is good" versus "this is bad" because that doesn't mean anything. The message I'm trying to get across is, there are lots of opportunities out there that should not be discounted because things are "going to hell", because the disruptions that are happening now are fairly low key by even recent historical standards. There are lots of reasons for individuals to believe that their life will get better rather than worse, and people shouldn't be intimidated by doom-and-gloom media coverage.

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So that is a very interesting article, and I mostly disagree with it. To wit:

[Nixon] asked his second Federal Reserve chairman, Arthur Burns, to develop what became an ultimately famous division between "core" inflation and headline inflation. If the Consumer Price Index was calculated by tracking a bundle of prices, so-called core inflation would simply exclude, because of "volatility," categories that happened to be troublesome: at that time, food and energy.

So they exclude energy from the core inflation index, and what happens? For most of the time since that adjustment, with the exception of a big price spike during the oil crisis of the 70s, inflation adjusted oil prices were lower than they were during his administration. So if this was simply to avoid the appearance of inflation, I'd say it was not particularly successful. I'm more inclined to take the rationale for that decision at face value.

I don't have a very high regard for Harper's, largely because their essays are chock full of holes and tend towards a cynical, conspiratorial perspective. I trust the calculation of the CPI, along with most other economic statistics, more than I do what that publication says about it.

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YOU CAN HAS ECONOMIC EVALUATION.

The DJI is what it is; it's just a stock index, and as far as I know there is nothing in its formulation that is overtly or deliberately deceptive. So it is a basic indicator, it's just that it's not the sole or even primary indicator of overall American well-being.

To say "Dow Jones up, good, Dow Jones down, bad" is common, but silly, and is rightfully dismissed in that context. I don't know why the media fetishizes that number, and not, say, the Gini coefficient. That still does not invalidate the usefuless of the index to those who trade stocks, even if they are a distict minority.

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Mmm. Corn.

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bikerbearmark.livejournal.com

Very interesting. Thoughts on what has occured to change minds so drastically?

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Maybe it was the lack of a Q1 recession that made a lot of people question "conventional wisdom" all at once.

It's one of those rare cases where I can say I did that before it was fashionable. ;-)

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furr-a-bruin.livejournal.com

"Growth for the sake of growth is the ideology of the cancer cell." -- Edward Abbey

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bikerbearmark.livejournal.com

Tony, my friend, you are always ahead of fashion - sometimes so far that fashion gives up before it can catch up!

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Wanna take me out to lunch? ;-)

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> I'm ultimately of the school that believes that growth is unsustainable and that the right goal is to not just stop growth, but deliberately receede the whole economy to a sustainable level.

Ooooh, HERESY!

I came to that same conclusion in my college macroeconomics class, and nearly flunked.

Interesting to see we share that same core idea.

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It's all a thought experiment for me.
Your original point of dissonance between facts and spin is sound, whatever information you trust.
If the economy tanks, people will stay home and watch more TV and DVDs. If not, there will be more capital to fund indie projects. I'll work regardless.

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h0gwash.livejournal.com

Stocks have treated me well in the past, but I'm still scared of the stock market.

I think the majority of the players in the stock market are not looking for long term $$$, they are looking for short term $$$. With the news that there was no recession in Q1 coming out at the end of April, you would expect short term predictions on a 2008 recession to drop in the first part of May.

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arkanjil.livejournal.com

I'm not sure of anything, and recession always seemed a bit simplistic for what, well, what may come. Possibly, maybe. By my lights, it's all seemingly ready to come crashing down at a moments notice- but markets are tricky things,a nd the power of hope is strong indeed.

Which is probably for the best, all things considered. I will try to be more circumspect about what I post or at least how I present it, tho.

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By amazing coincidence, Tyler Cowen tackled exactly this issue today. An interesting contrast to the Harper's article!

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Thanks! It is a nice contrast, and gives me a better-rounded take on how economic voodoo is conjured up. i like to look at the big picture before I decide what to trust.

Also by coincidence, I found this story about another spin on this country's worries :)
http://www.reuters.com/article/ousiv/idUSN0229405520080503?pageNumber=1&virtualBrandChannel=0&sp=true

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