In a recession? Depends whom you ask

Are we in a recession?

Everyone from nervous workers who fear that they could lose their jobs to Wall Street whizzes who've experienced wilder dives and surges than a theme-park ride are worried that the U.S. economy could tank.

President Bush, Treasury Secretary Henry Paulson and Peter Orszag, the director of the nonpartisan Congressional Budget Office, don't think we're in a recession, and they don't think we're approaching one.

"Our economy is structurally sound, but it is dealing with short-term disruptions in the housing market and the impact of higher energy prices. These challenges are slowing growth," Bush said from the White House on Thursday. "Yet Americans can also be confident about our long-term outlook. Our economy is strong, it is dynamic and it is
resilient."

But in the Swiss Alpine resort city of Davos, the respected head of Mexico's central bank, Guillermo Ortiz, said this week that he thinks the U.S. economy has slipped into a recession.

"The U.S. economy is already in recession, and its effects could last for a (long) time," said Ortiz.

Who's right?
The answer depends partly on which definition you choose. The textbook definition for a recession is two consecutive quarters - six months - of negative economic growth. Under this definition, the earliest we'd know is late June or July.

The National Bureau of Economic Research, which provides the dates for recessions after the fact, works off a broader definition. It defines recession as a "significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP (gross domestic product), real income, employment, industrial production and wholesale-retail sales."

By that definition, mixed economic indicators now point to a slowdown, but not recession.

Economic growth is slowing, but the weak dollar has boosted exports and that's helped offset some of the drag from the housing slump.

The good news is that many economists believe the bottom must be somewhere in sight after a nearly two-year housing slump.

By KEVIN G. HALL
McClatchy Newspapers
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How do you view the most recent economic problems in the United States?

Due to the rise in oil prices among other things do you think there is a recession brewing in the world?

What do you make of the different “definitions” to describe recession? Do you think that the chosen definition reflects the bias of the person who chose it?

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