A recession is two consecutive quarters of gross domestic product (GDP) shrinkage. A depression is GDP shrinkage of 10%. President Obama's ongoing stimulus package and Ben Bernanke's management of the Federal Reserve have apparently reversed the former and averted the latter... if you believe statistics. The Bureau of Economic Analysis says our GDP grew 5.7% in Q4 2009.
That growth may yet be revised down—BEA's latest report revises their Q3 2009 figure down from 4.2% to 2.2%. But remember: a year ago, we were in economic free fall, suffering contractions of –5.4% in Q4 2008 and –6.4% in Q1 2009. In one year, we reverse the trend and post the highest quarterly growth in six years.
The Bush II economy beat that growth rate once, growing at 6.9% as we went to war in Iraq in Q1 2003.
This is why the market-rattling Bernanke-bashing fizzled: even Tennessee Republican Senator Bob Corker acknowledges that the Fed chairman has prevented a worse economic collapse. This is also why we need to learn that the federal budget is not like a family budget: as Robert Reich explains, when the economy goes down, it's government's job to fill the gap and boost the economy, as it appears to have done in Q4 2009.
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Update 20:03 CST: But when it comes to jobs, we're still up a creek... maybe through 2015.
Unemployeement is still >10.0 %
ReplyDelete...and I'm looking for a job. The gravity of the situation is not lost on me.
ReplyDeleteTh stimulus was suppose to create jobs. Unemployment went up. So where is the growth going? Right into the pockets of rich plutocrat bankers. Sounds like what the Progressives wrongly call capitalism. The correct term is corruption.
ReplyDeleteSteve Sibson
cory,
ReplyDeletethe number was just an estimate for one thing, and most of this 5.7 number is based on inventories - so unsold inventory has increased - an increase like that means nobody is buying anything. so really its "stimulus still not working..."
check this out for a quick rundown on this false 5.7 number:
http://business.theatlantic.com/2010/01/us_gdp_grew_by_57_in_the_4th_quarter.php
"false 5.7 number"
ReplyDeleteCory using faux statistics to lead us away from the truth? Who is surprised?
Steve Sibson
Michael, I agree that GDP by itself is not a great measure of true well-being. It's kind of like saying my blog hits are up, so yippee... even if the increase comes from spam. Quality often matters more than quantity. GDP can go up and common people's lives still lack liberty and happiness.
ReplyDeleteI even agree that 5.7 is probably not the final number: as I note above, the Q3 number was revised downward, and teh Q4 number likley will be as well. That's nothing unusual. But I can't agree that it's a "false" number. 5.7% does describe the good-faith estimate of growth in economic activity. People are buying things: specifically, producers evidently bought more materials and turned them into products. That suggests businesspeople see cause for optimism and are stocking the shelves in anticipation of more business.
I will grant that we'll have the same unresolvable debate over whether the stimulus is working as we do over whether the Patriot Act is "working." We cannot tell how bad the recession (Depression?) would have been if we had not pumped the stimulus money into the economy. My little girl got the H1N1 vaccine, but this week she developed a bad cough. Are those shots "still not working," or is this cough much less than the possibly fatal flu she would have contracted without them? How can we tell?
"It's kind of like saying my blog hits are up, so yippee... even if the increase comes from spam. Quality often matters more than quantity."
ReplyDeletetruth = spam
quality = faux statistics used in hypocritical partisan party finger pointing
I think Cory has it backwards.
Steve Sibson