Recession or Depression?

OK, the textbook definition of a recession is two consecutive quarters of negative growth. This recession does not fit the textbook definition of a recession because the powers that be pinned the start in December 20007 - after which we still had a quarter or two of positive GDP.

I could go into a long, tedious discussion. But I won't. So my abbreviated response is the following.

1. The recession that started December 2007, essentially stalled (no meaningful GDP decline, no meaningful shedding of jobs).

2. Rising energy prices, and failure of the financial system forced the hands of employer's who had not shed jobs.

3. Rising unemployment in Q4 08 and continuing in Q1 of 09 is expected and somewhat reflective of the recession stalling during the first 3 quarters of 08.

4. The January UR rate of 7.6% is not near typical recession bottoms. The Bush 1 recession peaked at 7.8% - indeed UR was above 7% from 10/91 to 6/93. The economic malaise of the early 80's had UR peak at 10.8%, and remained above 10% for 10 months. Unemployment was essentially over 7% from May 1980 to Octber 1986! The malaise of the 1970's had UR essentially above 7% from December 1974 until August 1977, with a peak of 9%. The point is, we have only been above 7% UR for 2-months! Let's give this recession a chance before we call it the Recession of All Time!

5. We aren't at the bottom. But I don't think we will hit 10% unemployment. Too much money dumped into the system, collapsing energy prices, and swift massive job cuts.

6. It plays into the politicians (and businesses) hands to promote this as the end of the world.

7. Business and consumers will find a way. Voids and cracks in the economy will quickly be filled by the profit motive. Failure is a fundamental necessity for the success of capitalism. As one firm fails another is created and moves into the market

Economic capitalism is darwinian. Species must adapt to the environment or they become extinct. The pain of government's attempting to stall evolution is greater than the pain of letting evolution take it's natural course. This is no more evident than the actions being taken by our government attempting to borrow our way out of situation that was precisely caused by borrowing. Next end of the world scenario is government debt!

It's not a depression - even if I lose my job!

I think we will see a bumpy road for the next year, a few bright spots and more bad news. Q2 of 2010 should start showing consistent improvement - if for no other reason than the GDP has dropped so much that Year of Year growth is a virtual certainty.

 

the fix to this problem as i see it is that the the goverment should provide deep tax breaks or credits to companies that bring their manufacturing jobs back to the U.S. i mean a tax break that would make the move back so ecomonical to the company that they couldn't wait to return the jobs i see being created around here are jobs that are in retail box stores these type jobs cannot substain this country because as the unemployment rises the retail stores will have cut back

 

What company in their right mind would stop producing offshore where they can pay a worker pennies on the dollar compared to a U.S. worker?

Tax breaks aren't going to cover the difference.

Small businesses are where the jobs are, (from 60 to 80% of new jobs created) and always have been, and the small businesses of this country were ignored in Obamas stimulus giveaway.

 

National Health Insurance would be a major stimulus to the creation of small (new businesses). The cost of providing (just for the owners) is prohibitive.

 

i heard chrysler asked for a billion dollar loan back in 1979, dont guess they learned anything

 

That loan was paid back earlier than they had been given to do so. Too bad Iacocca (sp?) isn't around still.

 

I was with Anvil Knitwear for almost 10 years before they shut down here in NC in 2007 laying off 600 american workers and built a very large plant in Honduras. As soon as CAFTA was signed, they bought the land down there and started building. They make t-shirts, if you look at the tags of some Nike products and other "high quality" items like that, you'll see the Anvil label most of the time.

We use to nose around in our dept. manager's office after he would leave (he signed a 5 yr contract to go down to Honduras to work) and would find printed emails and stuff laying around about what was going on down there while they were phasing that plant in and phasing us out.

We found the pay schedule for employee pay for down there. Our machine operators were making $12.85 an hour at the time and the machine operator pay down there was an equivalent of $.89 an hour american. Yes, that's eighty-nine CENTS an hour!

U.S. can't compete with that, those jobs are gone for good. They aren't coming back. Around here it's been plant after plant closing the doors or moving offshore, they aren't coming back. It makes me mad every time limbaugh or someone on the news says that americans are holding on to their money and not spending. They don't have any money to spend!! They have no paycheck coming in to spend!!

 

To be correct a depression is 4 consecutive quarters of negative economic growth, so far we've only had one I believe. Not slowing growth, but negative growth, meaning negative GDP versus previous quarters, etc