- A Short-Sighted Cheer for Easy Money
- Stocks and Voters Show GOP the Way
- Is the Obama Bubble About to Burst?
- The Economics of a Three-Race GOP Sweep
- GDP Up, Dollar Down, Troubles Remain
- Supply-Side Healthcare Solutions with Sen. Mitch McConnell
- Economic Freedom Fighters, Unite
- An Interview with Jon Kyl on the Back-from-the-Dead Public Option
- David Goldman: The Dollar Is Toast And It Won't Help The Stock Market
- Why Not Cut Taxes and Spending?
SHOW TIMES
Weeknights 7p ET
CNBC Asia:
Saturday 06:00 SIN/HK
Sunday 04:00 SIN/HK
CNBC Europe:
Monday - Friday 10:00 CET
Saturday 06:00 CET
Sunday 04:00 CET
RSS FEED
MOST SHARED
- Home Prices Start to Stabilize In the US as Sales Pick Up
- Israel: Leader of Business Innovation
- iPhone, App Strategy the 'New Dot Com?'
- Why Health Care Bill Is Facing Such a Tough Fight in Senate
- BofA Board in Civil War Over Lewis' Successor
- S&P Stocks Trading at New 52-Week Highs
- Dow Industrials at New Highs—But Other Indices Lag
- Dow Up Over 100 After G20 Stimulus Pledge
- Flaw in US Data Overstates Growth, Productivity
- Rock Band Weezer Uses Snuggie to Promote New Album
CONTACT US
We want To hear from you!
E-mail:
Text Size 
U.S. News & World Report's "Jimmy P" Pethokoukis and economist Jerry Bowyer - both regular contributors to Kudlow & Company - deliver two amusing takes on today's GDP number and the muddled response from the economic punditocracy. Incidentally, take a look at the Intrade pay-to-play prediction market's collapsing recession odds: they plummeted 20 points this morning. Talk about falling off a cliff.
Dude, Where's My Recession?
April 30, 2008 09:51 AM ET James Pethokoukis Permanent Link
Out: Recession. In: Expansion. That's my quick take on today's first-quarter gross domestic product number, which showed that the economy grew 0.6 percent in the first quarter. Now that's not a robust number by any means, but it's not so bad given all the worry out there that the economy is headed off a cliff. Before you declare a recession, as many economic pundits have, shouldn't the economy, well, actually recess a bit—if only for a quarter?
Remember, the shorthand rule for declaring a recession is back-to-back quarters of negative growth. The semiofficial recession judge, the National Bureau of Economic Research, has a more complex formula, but I am not sure it has ever declared a recession when the economy never actually shrank. And consider this: The Intrade online betting market now says there is a meager 25 percent chance of a recession—using the negative-back-to-back-quarters definition—in 2008.
Plus, don't forget that there's a lag before all that monetary stimulus from the Fed kicks in. (It's not too late to do nothing today, Bernanke!) Who knows—those rebate checks might even help a bit, though we're probably not getting much bang for the nearly $200 billion we're spending.
As a movie buff, I keep looking for the right cinematic analogy for the American economy. Try this one: It's like the Terminator. Not the Schwarzenegger one—the other one, the Terminator from the second film. You could empty a shotgun—or in this case, an imploding housing market, credit crunch, and high oil prices—into that morphing metal dude, and before you know it, the thing's all healed and chasing you again.
* * * * * * * * * * * * * * * * * *
-----Original Message-----
From: Jerry Bowyer
Sent: Wednesday, April 30, 2008 11:09 AM
Subject: RE: We Are In a Recession
Okay, so here we are again. Another quarter and another plus sign. The economy grew every quarter last year and, so far, it's continued to grow this year. The pessimistic-financial-pundit-industrial complex suffers another quarter of model-crushing data. Will they change their models? Don't count on it. Fear sells, it sells newsletters; it sells bookings; it sells speaking gigs.
Today, brace yourself for the tribe of Yesbuts.
Yes, but the postive GDP is from inventory adjustments.
Sure it is. Shouldn't inventory be counted in GDP?
Yes, but it's also from government expenditures.
Shouldn't government spending be counted in GDP. Especially for those Yesbuts on the left...it seems that you see government expenditures as being a good thing, except when they boost growth.
Yes, but Gross Domestic Income differs a little.
GDI is a fine statistic, which will be rediscovered today in a desperate search for bad news. Even as I write, financial pundits are dusting off their college Macroeconmics textbooks and rifling through pages trying to relearn how GDI is calculated. Let me save you the trouble. Its made up of personal income, plus business profit, plus sole proprieter income. The business profit is domestic only, hence the D in GDI. If you want to capture the productive power of US business overseas, look at the long-neglected GNP, which has been doing quite well lately. Though, it's not out for Q1 yet.
Yes, but durable goods were down in Q1.
Indeed they were, which means that the rest of the economy was strong enough to pull us into positive territory. On top of that durable goods were down, not because of economic weakness but because some probusiness investment tax cuts expired in December and were not reinstated until halfway through the first quarter. It wasn't recession; it was a temporary tax code distortion.
For the perma-pessmists who were flat out 100% sure that 'we're already in a recession, the debate is about how long and how deep' - back to the spreadsheets.
For the rest of you - have a nice day.
Jerry Bowyer
Chief Economist Benchmark Financial
Data is a real-time snapshot *Data is delayed at least 15 minutes