Despite popular discussion, we are not in a recession, the economy grew by 0.6% in the first quarter of this year. This is the same growth that occurred in the fourth quarter of last year.
The economy is limping along, mainly being pulled down by the housing and credit markets, but it still grew.
I think the media needs to stop the gloom and doom. The keep putting the “R” word out there when it is not really a recession.
So what is a recession. I have found two relevant definitions of what a recession is.
- A significant decline in general economic activity extending over a period of time. (Argmax Glossary of Economic Terms)
- Broadly defined, a recession is a downturn in a nation’s economic activity. If national productivity, or gross domestic product (GDP), declines for at least two consecutive quarters, it is usually considered a recession. (MorganStanley)
So you can see, we are not in a recession. It would take another six months or two quarters before we would officially be in a recession.
But according to an Associated Press story, many analysts predicted that the economy would grow by 0.5%. They are now predicting that the second quarter will grow by that much.
So, we are not in a recession. The economy is not doing well and is struggling. We need to be vigilant and make the right decisions, but the media and the pundits should not be going around projecting that we are in a recession.
They more they say it, the more people will believe it.
Read more in the Wall Street Journal: Fed Cuts Key Rate, Signals A Pause