The Associated Press's business writers and many others in the establishment press spent just over a year reminding readers at seemingly every conceivable opportunity that the recession began in December 2007, simply because the supposedly apolitical collection of academics at the National Bureau for Economic Research said so.
Lo and behold, in her year-end roundup of 2009's top business stories, an article so biased and error-prone that I am devoting my next weekly column to deconstructing it, the Associated Press's Jeannine Aversa writes that:
After four quarters of decline, the economy returns to growth during the July-to-September period, signaling the end of the deepest and longest recession since the 1930s.
Well, isn't that special?
All of a sudden, Aversa is telling us that that the recession really ran from the third quarter of 2008 through the second quarter of 2009. She says that the recession ended during the third quarter of 2009 simply because the economy has returned to positive GDP growth (i.e., the "signal" went from a minus sign to a plus sign), which means she is now pegging it as having begun just four quarters earlier.
In other words, after using the NBER to define the beginning of the recession, she is using the "normal people" definition of a recession to say it's over.
No can do, babe.
If you want to come back to the "normal people" definition, Jeannine, you and your colleagues are going to have to rewrite all items composed during the past year that dated the recession's beginning as December 2007 -- items that conveniently told us that we were putting up with a recession for more than a full year before Dear Leader came along. If you and your fellow journos aren't willing to do that, you're just going to have to be patient like the rest of us and wait for the NBER to tell us when it ended, and in the meantime shut your traps about whether it is or isn't. In other words, if it's on because they say it's on, it doesn't come off until they say it comes off.
As I noted in my Pajamas Media column/BizzyBlog post on February 12 and 14 this year, NBER, to arrive at its December 2007 determination, ignored three different significant pieces of evidence it cited in its own report -- beyond the obvious fact that second quarter 2008 GDP growth was positive, ultimately even after the comprehensive revision several months ago -- that the economy was improving during 2008’s second quarter, but got stopped in its tracks after that (bolds are mine):
The income-side estimates (of gross domestic income) reached their peak in 2007Q3, fell slightly in 2007Q4 and 2008Q1, rose slightly in 2008Q2 to a level below its peak in 2007Q3, and fell again in 2008Q3.
Our measure of real personal income less transfers peaked in December 2007, displayed a zig-zag pattern from then until June 2008 at levels slightly below the December 2007 peak, and has generally declined since June.
The Federal Reserve Board’s index of industrial production peaked in January 2008, fell through May 2008, rose slightly in June and July, and then fell substantially from July to September.
Beyond these three contrary items, considering December 2007 through June 2008 as part of the recession has these other additional flaws:
- In December 2007, the economy added 120,000 seasonally adjusted jobs.
- Fourth quarter 2007 GDP growth was an annualized +2.1%.
- Compared to the first two full quarters of previous recessions, the first six months of 2008, with its average of +0.4%, is the only period showing positive net positive six-month GDP growth.
- Jobs lost during the first six months of 2008 were lower as a percentage of the workforce than any other first two full quarters of previous recessions.
I for one am perfectly willing to concede that the recession as normal people define it is over, even if the economy's performance isn't particularly impressing anyone. In fact I have to; that's what's nice about having clear, objective, fact-based definitions. Of course, that also means that I've always said that the recession began in the third quarter of 2008.
But given that seasonally adjusted job losses haven't yet ended, new home sales are still in the tank, and the largely government-induced nature of third quarter 2009's growth, it's hard to see how NBER, if it is to be consistent, will consider the recession to have ended in July. We'll have to see what these supposedly apolitical academics have to say when they say it.
Cross-posted at BizzyBlog.com.
