Mar 12th, 2008
Recession Watch 2008
As I said earlier, the definition of a recession is two consecutive quarters of negative gross domestic product. Fourth quarter 2007 data indicated an anemic–yet positive–growth rate of 0.6 percent, which means if there is going to be a recession, it would start with the first quarter of 2008. Signs seem to point to a negative GDP during the first quarter (which is still going on), so the question would largely be whether or not the second quarter of 2008 will have growth or not.
It’s very difficult to say if the second quarter will be positive or not. It’s not likely to have a large deal of growth, so if it’s positive, it’ll be barely positive; on the other hand, the economic stimulus package which is delivering $600 into the hands of many (but not all) taxpayers will be taking effect in that second quarter. If the working/middle class recipients of those rebates do what congress is hoping with that money–spend it–it’s possible that the second quarter will indeed squeeze out positive growth and we’ll avoid the recession that many have predicted.
I would put odds of that recession happening at about one out of two.
But right now, still, no recession–yet.
Pop culture seems to define a recession based on how many people “feel” like there’s one going on.
Just the other day on Paul Harvey, he said that 9 out of 10 CFO’s say there’s one in progress and that is good enough.
If you wish for one long enough, you’ll get it. Personally, I think we’re just not happy with slow growth, tight credit, and high oil prices.