Wednesday, April 30, 2008

The R-Word

There is an old joke among economists that states: “A recession is when your neighbor loses his job. A depression is when you lose your job.”

Look, people, let’s get it straight.

This is NOT a recession.

Recession is a specific term that defines an economy that has CONTRACTED. Shrunken. Gotten SMALLER.

That means that the economy has to actually have NEGATIVE GROWTH in order to start worrying.

This does NOT mean that just because the rate of growth is slowing down (to having GROWN a mere 0.7% in the first quarter of 2008 - which means a 2.5-3.0% growth rate for the year) that people should start whining that things are collapsing, or even staying-the-same-freaking-size.

It doesn’t become a recession until our economy actually starts moving in the other direction. It also doesn’t matter how bad your own personal situation might be, because the plural of “anecdote” is not “data”. We’re talking about the national economy.

So just because the rate of growth has slowed down doesn’t mean we’re suddenly driving in reverse.

Update: The DJIA closed down a few points today, but even so, it is up 4.6% for the month of April - the highest one-month gain in a year.

Worst economy since Hoover again…

5 million jobs created, income up 19% since Bush took office, and Chicken Littles are still being listened to.