- The International Monetary Fund thinks the stimulus package is a good idea and will help the U.S. economy avoid a recession. The IMF sees economic growth for the U.S. declining from 2.2% in 2007 to 1.5% in 2008, down from its October prediction of 1.9%. The IMF also sees 4.1% growth for the world economy in 2008, down from 4.9% in 2007. Last July , the IMF predicted 5.2% growth in 2008, then revised that guess down to 4.4% in October [Christopher S. Rugaber, AP, "IMF Sees Slowing World Economy in 2008," BusinessWeek.com, 2008.01.29].
- The U.S. economy did hit the brakes hard last fall: after posting relatively vigorous 4.9% growth in the third quarter, fourth quarter GDP growth was only 0.6%, half the rate economists had been predicting. Consumer spending grew "only" 2% ["Fourth-Quarter GDP Nudges Up 0.6%; 2007 Growth Slows to 2.2%," FoxBusiness.com, 2008.01.30].
- The core inflation rate, that silly statistic that excludes food and energy, was only 2.4% for 2007, the lowest rise since 2005. Unfortunately for those of you who choose to consume food and energy, food costs rose 4.9% and energy costs rose 17.9%. Overall inflation for 2007: 4.1%, biggest jump since 1990 [AP, "2007 Inflation up by Largest Amount in 17 Years," MSNBC.com, 2008.01.16].
- Dr. Mankiw points us to a January 2008 study by Congress's Joint Economic Committee which says that the probability that the economy is in recession right now is 35.5% [PDF alert!]. This figure comes from the "employment recession probability index," a stat based on weekly unemployment insurance claims. The good news: we don't call it a recession until the index reaches 65%. The bad news: last month the index stood at 10%.
Recession or not? The numbers aren't happy, but they aren't negative. The economy isn't shrinking; it's just not growing as fast as some would like. Whether that constitutes a $146-billion crisis is now the question for the Senate.