No Recession
FEDS: No Recession; Economy Grows 0.6%
Don’t misinterpret the posting of this news article. I am not happy about a slowed economy, the sub-prime mortgage crash, or lowered consumer confidence. These are worrisome stats.
But this posting in an I Told You So from a couple months back in some discussions a few of us were having on FaceBook. I said that we were not in a recession, even as the media kept repeatedly using the word.
Words mean things. A recession is defined as 2 consecutive quarters of negative growth in the GDP. We haven’t even had 1. And there are some signs that we may beging to pull out of “slow growth mode” by the fall.
Bottom Line: Don’t listen to the media.
Booya.
P.S. Eric, Joel, JK, Bryce and Avin…and don’t even bring your Ron Paul-Austrian Economics smack-talkin’ over here.
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Jermination 
April 30, 2008 at 9:53 pm
we are not technically in a recession, no. but our dollar is once again depreciating and the fed keeps printing more and more money…..it will catch up with us unless we return to sound money…..and no political candidate is speaking about our dollar depreciation other than Ron Paul
we are subsidizing our dollar to china and they are paying for our war in Iraq. if they called in those chips we owe them, what would we do? we are living beyond our means in the government. we are attempting to run an empire and all empires fall.
let us remember that every great empire in history fell because of a decline in the currency
peace, love, and liberty
April 30, 2008 at 10:37 pm
great post. i’m not a big fan of hype either.
btw: i’m not a huge fan of ron paul … i’m more of a fan of many of the ideals he stand for … ron paul is certainly not the last hope for america.
April 30, 2008 at 11:44 pm
Good to know Avin 🙂
Joel: better stock up on your Gold, then 🙂 LOL. (kidding!)
May 1, 2008 at 12:01 am
Laugh about the Austrian school all you want. Their ideas are now coming into the limelight, as all the neoclassical economists are scratching their heads wondering how monetarism broke, and why the typical levers aren’t working like they’re supposed to.
Joel! You’re totally stealing my next blog post with the China crap! I had a chance to meet Joe Donnelly (2nd District Congressman) last Friday, and was able to ask him what he thought about the China situation, and he said that basically the U.S. can’t do anything to combat the false economy of China, because if our loans got called in we would be completely screwed. In other words, we mortgaged our sovereignty! Think about it.
By the way, I’ve heard that definition of recession a few times as well. Today I heard someone (don’t remember who) saying that this particular definition is a myth. I don’t know if we’re technically in a recession or not, but I can tell you one thing — businesses are hurting. My company supplies a pretty wide cross-section of market segments, and we’re feeling the strain. Everyone in manufacturing is hunkering down.
Also, there are some problems with the way things (like GDP & CPI) are measured, but I’ll save that for another time.
May 1, 2008 at 1:31 am
come on jerm, i wanted to start something here…is that the best you got?
May 1, 2008 at 7:53 am
No its not the best I got…but once again I’m pointing out the fact that the Media is in the tank for a Democrat, which means they just love to toss around the “R” word all the time. The economy dooing poorly is an issue that benefits Democrats (at least they think it does), and so they will mis-report, half-report, and flat-out lie about it to make sure their worlview is the most publicized one. They don’t care that their reports might frighten people – i fact, they LOVE it.
So they say “the mortgage meltown crisis” is making it impossibl for people to get a mortgage. That is simply not true. There is a problem in the sub-prime mortgage market, but the other market segments are doing fine. You can get a traditional mortgage right now with very low rates and awesome terms with NO PROBLEM AT ALL.
An the sub-prime mess has nothing at all to do with George Bush, either. Greedy lenders decided to take increased risk by lending money to people who couldn’t afford to buy homes in the first place and didn’t qualify for traditional mortgages. They messed these people over with high closing costs, high fees, and stupid A-R-Ms. Now these people who shouldn’t have qualified in the first place are in an even worse positions because their ARMS are kicking in.
But this is not what the media reports. They report that the average person can’t get a mortgage anymore – that the mortgage companies are all going broke – that we need government intervention – THE SKY IS FALLING!
But actually this is the free market working. Some banker guys made some stupid risky decsions and now they are geting burned. This is the free market. It corrects itself.
But the truth doesn’t sell news very well. Nor does it get your preferred candidate elected.
May 1, 2008 at 11:47 am
Jeremy – Not everything is as good as the Fed would lead you to believe. With that in mind, I mostly agree with you. And the bad loan thing is a given. The sub-prime mess has some interesting implications with regards to the effects of government intervention as a whole. People do things they don’t understand because they think the government has regulations in place to protect them from themselves.
As for this being a result of the free market, you are half right. Think of the free market economy as a rubber band. The further you stretch it, the more force it has when it contracts. The government is looking at a tightly wound rubber band and they’re trying their best to keep it from snapping back with some force, while at the same time trying to tease a little more stretch out of it. The free market would not have stretched so tightly without some moderate corrective contractions.
May 1, 2008 at 3:34 pm
hmmmm market corrections from a Ron Paul guy? That’s interesting. I thought he was Mr. Lassez-Faire.
May 1, 2008 at 10:33 pm
I’m not sure I presented my thoughts well. Yes, I am in favor of laissez-faire — almost to the point that it is cult-like (but not quite). I was trying to say that the small corrections that would occur naturally in a free market are suppressed by government (by expanding the money supply and regulating the market), thus moving things further into disequilibrium.. so the current ‘correction’ that is taking place is bigger and more harmful than the minor corrections that would occur in a true free market.
May 2, 2008 at 11:37 am
OH NO! News this morning is terrible!!! (Well, if you’re a democrat).
Jobless numbers down. Wall Street up over 13,000. Dollar value is up. Nest story: “Fears Ease on Wall St.”.
Bad news, Dems. If the economy comes roaring back you can’t campaign on that anymore…
May 2, 2008 at 11:40 am
And by the way…anyone who has a pension plan, retirement plan, college investment, 401k, IRA, mutual fund investment ought to be DANG HAPPY that the oil companies are making a good profit right now. Yes – that benefits YOU, sucka.
May 2, 2008 at 11:42 am
And what are you going to do with all that Rice you stockpiled last weekend?
May 2, 2008 at 10:55 pm
This is the most thought provoking argument i have seen on any blog this summer, but we are just getting started. i agree with alot of what has been said, especially by whoever Eric is. But there was a term that was used, “equilibrium.” this term is total taboo to any Austrian economist. there is no “equilibrium” that the market reaches, because things are always changing. Prices, income, purchasing power, interest rates, etc. And unlike Eric, i am “cult-like” in my laissez-faire leanings. I’m for privatizing national defense, but that is another subject and only used here to show my devotion to the free market. We see that the free market works in so many areas, so why should in fail in the others; it always finds a way.
and lastly, something that no one is talking about. We seem to be so against monopolies in America, with thousands of anti-trust laws, and that is no overstatement, but yet we are ok with the Fed having a monopoly on interest rates. why can’t banks set thier own intersest rates. and i am talking mainly about overnight bank to bank loans. which in turn greatly effect interest paid on loans, etc. b
that is a monopoly and i am still not against monopolies, but something to think about. i cold continues about you little “greedy, lender” remarks and how they actually reacted very rationally, but then we would be too philosophical for you, too Austrian. And you want technical terms. But even now, economists are conceding that there is no technical definition to a recession.
Lastly, you’re entire argument is based on numbers, what does the world tell you. and poor numbers at that, you are celebrating almost flat growth and a lower growht in the unemployment rate. and more numbers, the feds lowering the interst rate, because even they know that there is a recession and they are doing all they can to stop it. so it finally doesn’t matter what you call it. I like Black Tuesday Deja Vu, personally.
May 2, 2008 at 11:05 pm
haha i cant believe this is still goin
May 4, 2008 at 11:20 pm
The sky is always falling in the media. It sure is doing it’s job of keeping us afraid.
May 6, 2008 at 3:43 pm
Bryce – My faith wavers on matters that involve potential tragedy of commons situations and matters of infrastructure — although I freely admit that government control of infrastructure has some significant problems, and would tip my hat to privatization anywhere that is was obviously possible. Privatization of the military is an argument I haven’t heard much about, but seems much more feasible than things like roads, some municipalities, etc as one might hear from a guy like Murray Rothbard. I have to say, I love the man and am always listen to his arguments with gusto, but at times I find myself with a lot of uncertainty regarding his extreme laissez-faire views.
Also, Austrian economics is a hobby for me, so yeah, I will tend to misspeak sometimes. I agree that there is no price equilibrium. The equilibrium I was referring to is an impossible state where the free market has reached maximum potential to distribute wealth and resources to the most appropriate allocations. Admittedly, this is my own definition.
May 8, 2008 at 9:14 am
News story today:
Wal-Mart same-store sales top Wall Street expectations http://biz.yahoo.com/ap/080508/wal_mart_sales.html?.v=4
Dangit, the dems say. You can’t “sell” a recession with crap like this going on…
May 8, 2008 at 11:48 am
How about this story.
Midwest manufacturing company has lay-offs after trying to manage through what was perceived as a temporary dip in sales because they believed the rate cuts would make the market recover. The company has had to cut back on labor after cutting back everywhere else that was possible. The 32 layoffs come as a result of floundering home and auto markets, and are the first in the company for a very long time.
Yeah, there’s no article to link to — that’s a personal account.
May 18, 2008 at 12:08 am
More it’s better than we thought news from the Wall Street Journal:
http://www.sun-sentinel.com/business/sfl-flzrecession0518sbmay18,0,585540.story
September 17, 2008 at 4:16 pm
Care to rethink this? What we’re seeing now is exactly what Austrians expected — the Fed pumped new money / credit into the mix, which expanded the bubble. After about 3 months, the inflationary effects of the new money became obvious. Next, the liquidity crunch returned. And here we sit.
September 17, 2008 at 5:20 pm
I don’t need to rethink the “recession” because there still isn’t one. The stuff we’re seeing right now on the news are due to mortgage lenders getting greedy and giving loans to people who shouldn’t have qualified for them (sub-primes). Then the investment bankers and hedge funds decided to buy bunches of these loans and bundle them together as bonds because the “returns” were too good to pass up.
So these idiot bankers loaned money to people who can’t pay it back, and then greedy Wall St. types invested into those mortgages. MORONS!
So tell me again why this is MY problem and why the government has to come in and save these turkeys’ backsides???
September 18, 2008 at 2:03 pm
The government made it your problem when they started giving handouts of your future (and your kids’ future) money. There IS a recession. Don’t treat the malinvestment of these firms as isolated incidents. The Austrian business cycle theory states that the result of the inflationary monetary policy of the Federal Reserve is manifested as malinvestment. Just because they can fluff some statistics and point fingers doesn’t mean that they understand what’s going on – we’re seeing the bubble created by market distortion collapsing before our eyes.
Why is this important for us peons? Because the government is ultimately our responsibility. We need to recognize the mistakes that got us here and use that information to protect our future.
September 18, 2008 at 3:03 pm
http://www.campaignforliberty.com/blog/?p=552