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American Capital, Ltd. Message Board

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  • towigg1964 towigg1964 Dec 1, 2008 3:11 PM Flag

    It's Official: Recession Started One Year Ago

    I read that article also, and puzzled how they can declare recession starting in December 2007, since the GDP was positive in the first half of this year, and did not turn negative until Q3 2008, and even then declined by only 0.5%.

    Since it is extremely likely that Q4 2008 will also show negative GDP growth, we will have the classic definition of recession of at least 2 quarters of negative GDP growth starting in Q3 2008, not a year ago when the economy was still growing. I don't understand their basis of declaring recession starting in December 2007 when GDP growth was still positive. Then again, I am not an expert economist like those who serve on the NBER.

    But if we do consider that we are already a year into a recession instead of 6 months according to the classical definition, then could it be possible that we are closer to a recovery than people otherwise would think? Markets usually turn positive quite some time before the economy recovers.

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    • I had read somewhere recently, forget where - sorry, that recessions lasted an average of 9 - 18 months. So the recession being called as of 12 months ago was a positive sign, at least to me. Tells me that we are much closer (maybe 6 months away - if the averages hold up) from clawing our way out of recession.


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