Economics

It's Official: The Greatest Multi-Trillion Dollar Economic Crisis in the History of Creation Has Led to a Recession

|

So saith the Business Cycle Dating Committee of the National Bureau of Economic Research. Many (though not all) significant macro measures of economic growth have been on the downhill slide since the last quarter of 2007. The heart of the matter:

The committee determined that the decline in economic activity in 2008 met the standard for a recession….. All evidence other than the ambiguous movements of the quarterly product-side measure of domestic production confirmed that conclusion. Many of these indicators, including monthly data on the largest component of GDP, consumption, have declined sharply in recent months.

And some specifics:

The committee identified December 2007 as the peak month, after determining that the subsequent decline in economic activity was large enough to qualify as a recession.
Payroll employment, the number of filled jobs in the economy based on the Bureau of Labor Statistics' large survey of employers, reached a peak in December 2007 and has declined in every month since then. An alternative measure of employment, measured by the BLS's household survey, reached a peak in November 2007, declined early in 2008, expanded temporarily in April to a level below its November 2007 peak, and has declined in every month since April 2008.

………….
Our measure of real personal income less transfers peaked in December 2007, displayed a zig-zag pattern from then until June 2008 at levels slightly below the December 2007 peak, and has generally declined since June.

……….

The last monthly measure of production is the Federal Reserve Board's index of industrial production. This measure has quite restricted coverage—it includes manufacturing, mining, and utilities but excludes all services and government. Industrial production peaked in January 2008, fell through May 2008, rose slightly in June and July, and then fell substantially from July to September. It rose somewhat in October with the resumption of oil production disturbed by hurricanes in the previous month. The October value of the industrial production index remained
a substantial 4.7 percent below its value in January 2008.
The committee noted that the behavior of the quarterly estimates of aggregate production was not inconsistent with a peak in late 2007. The income-side estimate of output reached its peak in the third quarter of 2007. The product-side estimate reached a temporary peak in the same quarter, but rose to a higher level in the second quarter of 2008.

Link via Marginal Revolution.

NEXT: A Lesson From Mumbai on The Occasional Futility of Common Terror Countermeasures

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. I so much wish Milton Friedman were alive to explain this to us, but, without his guidance, I fear we are in a time which will test Milton’s theory of what made the Great Depression last so long.

  2. Something tells me them Liberals are responsible for this.

  3. No shit, we’re fucked. I’m having a hard time disputing the conspiracy theorists at work these days; it takes a special sort of malice to screw things up this bad.

    Can the US do anything to avoid declaring bankruptcy as a nation or defaulting on debts? Aside from printing ourselves into Zimbabwe, that is.

  4. Something tells me them Liberals are responsible for this.

    God, what a troll.

  5. There has been an “official” recession since December 2007?

    Hot damn!

    The Bushpigs managed to delay this newsworthy tidbit until just after the election!

    How fucking ‘GOP’ of them!

  6. shrike, get a fucking grip. The NBER met via conference call three days ago and decided to look at evidence that is different from the standard we all know and love.

    Again, they met three weeks after the election. Only mentally unstable individuals such as yourself choose to engage in conspiracy theories.

  7. This thread is full o’ troll

    I count 3 non-troll comments and I, arguably, make 4.

  8. “Bin Laden determined to strike within the US”

    Who could have seen this recession/attack/meltdown/resurgency/blowback/deflation/credit bubble coming?

    No way!

    We pray a lot – we’re GOP and have a hotline to Jesus….

    But shit – he is not talking back!

  9. The Bushpigs managed to delay this newsworthy tidbit until just after the election!

    Yes, they worked the system to a resounding electoral sucess.

    How fucking ‘GOP’ of them!

    Actually, if that was there plan, I suppose you’re right.

  10. All this trolling and nary a fish in sight.

  11. OT:

    I’m shopping for air pistols. Anybody here into air guns? I want a fun plinker that hits hard enough to ambush squirrels and squabs so I can have some animal protein to accompany the soylent green during the imminent Tribulations.
    Seems like all the nice ones cost like “real” guns.None of those plasticy “tactical” models either.I don’t want to be collateral damage from the New Obama Military Occupation Forces.
    I don’t want to be a

  12. Yes, they worked the system to a resounding electoral sucess.

    They really tried.

    Seriously, as an investor, I heard Bush, Paulson, Perrino, and the Labor lackeys deny the existence of a recession a multitude of times this year.

    Even old angry McCain kept touting the solid footing of the economy until some time in September,

    Now Kolohe, you know these facts are easily verifiable. I may be unpopular here but I know what the fuck I am talking about.

  13. shrike, could you maybe, possibly, for like five fucking seconds, talk like you’re not in high school?

  14. THE BUSHITLER PIGS CAUSED ALL OF THIS. THE SHEEPLE MUST AWAKEN.

    I KNOW WHAT THE FUCK I AM TALKING ABOUT, LIBERTARIAN PIGS. I AM FROM THE INTERNET.

  15. Also, shrike, the Shrike from Dan Simmons’s books was walking death, not a little pissant. Change your name to “shrike lite” or “shrike in panties” so you stop sullying the name.

  16. This statement:

    I heard Bush, Paulson, Perrino, and the Labor lackeys deny the existence of a recession a multitude of times this year.

    is different from this statement:

    The Bushpigs managed to delay this newsworthy tidbit until just after the election!

    Like I said, the NBER determined the existence of the recession three days ago, well after the election.

    I may be unpopular here but I know what the fuck I am talking about.

    you’re having the same form of resounding success the GOP did.

  17. What and who is HFCS?

    High Fructose Corn Syrup? Have I been away that long?

    Is HFCS some sort of nutrition for an election loser?

    Come back with some fucking substance you sugary substitute.

  18. Mr corn sweetener takes the troll bait.

  19. SIV,

    shrike isn’t trolling. He’s obnoxious and he’s a bitch, but he’s also serious. SERIOUS FUCKING INTERNET BUSINESS. Fortunately, his ideas are shit and deservedly dismissed, but believe me, refusing to take him seriously pisses him off waaay more than actually trying to debate him.

    Also, what’s wrong with a .22?

  20. Come back with some fucking substance you sugary substitute.

    BUSHITLER PIGS AND SHEEPLE.

  21. Priceless

    Look Virginia it really is a recession.

    Do i detect a hint of sour grapes?

  22. This has become some sort of bizzaro world – with Corn Syrup telling SIV who I am.

    SIV hates me – we have run into each other before.

    And who are you again, Corn Syrup?

  23. SIV:
    Crosman pump or CO2 pistols are usually reasonably priced. The 1377 is a multi pump .177 single shot that runs about $50 at the local sporting goods store. This is a real tinker’s gun and can be modded with a shoulder stock, longer barrel, .22 barrel, etc. with minimal mechanical skills. Stock, It’ll pop squirrels if your shot placement is good enough. The Crosman CO2 pistols usually seem to come stock in .22. For a number of reasons, I don’t really care for CO2, but they are also easily modded, reasonably accurate, and not too expensive. .22 is generally better for small critters overall. They do make a CO2 revolver that is reportedly a good plinker, not expensive, but less expandable. I think it can be shot single action, too, which may be nice. Go to Pyramidair.com to see what’s on the market these days.

    I’d avoid the look-alike CO2 repeaters, some of which have blowback action like a real self loader. These are usually made for looks more than anything. Single shot spring powered pistols are available in a variety of price points. But they tend to be relatively low powered for squirrel and they all, regardless of price, have an unusual kick to them that takes some getting used to. The cheap ones are really cheap, and the expensive ones tend to be nice but kinda crazy expensive.

  24. Serious. Fucking. Business.

  25. Hate Shrike? No

    Also, what’s wrong with a .22?

    Too noisy for shooting in urban areas and I already have one. I don’t have a nice pellet pistol yet.

  26. Also, shrike, the Shrike from Dan Simmons’s books was walking death, not a little pissant.

    Interesting. I took ‘shrike’ from a book by Nathaniel West. Also it refers to an automatic rifle.

    Dan Simmons? I am off to Wikipedia.

  27. Greenspaaaaaaaaan! *shakes fist*

  28. Thanks shecky

    I used to have a 1970s 1377 but it was stolen. They were great right out of the box with decent plastic furniture and a steel breech. The new ones are sloppy and crude until you throw about 3 times the money at them. That is my first choice, especially if I’m going to pay someone to modify the internals. I can handle some stuff but I’m not going any deeper than the trigger and breach.Not too eager to try re-crowning it by myself either.I wish there was a nicer multi-pumper straight out of the box.

  29. Benjamin makes a multipumper that’s “nicer”. Real wood and metal. But honestly, despite the plastic, the new 1377 is still a good performer. Aftermarket steel is mostly an aesthetic pleaser rather than a performance mod. I’ve come to this conclusion after trying it all out and deciding if I were to start over again, I’d stick to the stock 1377 and call it a day. Performance mods are mostly a DIY affair after figuring out where all the air is lost. Tweaked air ports, modded valves, tighter seals, etc.

  30. I just saw a news headline on Yahoo, stock market plunges on news the recession started a year ago.

    I dunno… I thought it sounded funny, like stock market falls retroactively.

  31. Can someone please answer my question instead of debating with the retard??

    How are we supposed to get out of this mess aside from declaring bankruptcy or defaulting on our national debt? I suppose the other option is printing a fuckload of money until our debt means nothing too.

    AK-variants are sold out everywhere or have doubled in price in the last 4 weeks. I’m slightly worried about the future right now.

  32. Not enough credit is being given to the high gas prices this past year and it’s serious damage on our economy..A record number of homes and jobs have been lost as a direct result. And, while we are doing the happy dance around the lower prices at the pumps OPEC is announcing cuts to manipulate the prices upward again.We can’t take another year like this past. There is a wonderful new book out about the energy crisis and what it would take for America to become energy independent.This book is profoundly informative and our country needs to become more informed and move forward with becoming energy independent. Green technology would not only provide clean cheap energy it would create millions of badly needed new jobs. The Book is called The Manhattan Project of 2009 Energy Independence NOW. http://www.themanhattanprojectof2009.com I highly recommend this book if you are distressed about our economy, would like to see new jobs created and see our country become energy independent. http://www.themanhattanprojectof2009.com

  33. Great, Joshua, but the problem is that America was living on credit or close enough to the margin that the $1-2 increase in gas prices caused people to be unable to pay their bills. It’s an unsustainable lifestyle, how deep in debt are we?

  34. The coverage of this moronic announcement has been a complete joke. There’s a spot-on summary here:

    “I assumed that something very big had just happened – otherwise, CNN would not be desperately saying to me, “Jesus Christ, man, why isn’t your heart racing? This is BREAKING MOTHERFUCKING NEWS!””

  35. How are we supposed to get out of this mess aside from declaring bankruptcy or defaulting on our national debt?

    Five little words: cut spending and raise taxes.

    No one has looked the American people in the face and said “Look, folks, we cannot afford this”.

  36. No one has looked the American people in the face and said “Look, folks, we cannot afford this”.

    That’s the legacy of populism.

    The people will turn to Washington and say, “you’ve got to DO something!”

    Only a wise few of us will turn and say, “for the love of all that is holy, stop doing things.”

    For the economists in the house, the apparently cloistered eggheads of the NELB use a different standard for recession than is generally accepted. Does that play into it? I find myself wondering whether there aren’t political aspirations at work, mindful of the difficulty certain other progressive demiurges had getting their economic recovery packages passed.

  37. I fear we are in a time which will test Milton’s theory of what made the Great Depression last so long.

    Well, Bernanke has already expanded the monetary base a lot. IMO it has kept the economy somewhat afloat (we haven’t sunk too badly; we’ve had two quarters of growth this year!) but it hasn’t restored consumers’ and investors’ confidence, which is the driving force behind aggregate demand in an economy without government spending.

    I’d conclude from the evidence that monetarism is half true. The upside to it is that it’s not corrupted by the political process– the people who run the Fed know what they’re doing, and they respond somewhat quickly. It’s also cheaper, and less controversial, if the Fed does it. The downside seems to be that it can only do so much once nominal interest rates hit a low. All in all monetary policy seems to mix well with fiscal policy, and Keynesianism and monetarism both have some truth value.

    As for actually testing Friedman’s theories (monetarism, I assume?) any more than they’ve already been tested, don’t count on it. We’re not going to be able to test monetarism much because the government is going straight for some old fashioned, Keynesian economic stimulus.

  38. Five little words: cut spending and raise taxes.

    No one has looked the American people in the face and said “Look, folks, we cannot afford this”.

    It’s a long term problem. If the money is actually spent decently, then taxpayers will get bang for their buck and the amount we gain from all of what government’s doing will surpass how much we have to pay in the long run.

    But this is government we’re talking about, so good spending is wishful thinking. The Obama administration has even published some pretty dismal expectations with their policy ideas, which can be computed as long term losses if their expectations are right.

  39. Can the US do anything to avoid declaring bankruptcy as a nation or defaulting on debts?

    Most predictions of catastrophic doom have turned out instead to be problems that were muddled through and eventually worked themselves out (e.g. “Bankruptcy 1995”). So I am similarly optimistic (over the long term) about the current situation.

    The most dire financial situation was right after revolution, and that got worked out (at the expense of the anger of some western Pennsylvania farmers – and thanks to Alex Hamilton, who always gets a lot of hate in the comments here). The second is probably a tie between the panics of 1893 & 1907, where JP Morgan bailed out everybody both times – and, in the former, in a reversal of fortune it was Morgan who bailed out the US Government.

    All of which is to say, nothing we are seeing here is anything new. Mistakes will be made (some bigm some small), but things will work themselves out.

  40. Kohole, your comment is on-topic, reasonable, informed and non-trollish. Are you sure you’re in the right place?

  41. These threads must be going the way they’ve been going because of the holidays. Everybody’s all hopped up on stuffing and cheap wine.

  42. Five little words: cut spending and raise taxes.

    Last time that was tried in a recession: 1936. Ever see a chart of GDP growth during the 30s? Bad move.

  43. Oh wow! They finally admit there is a financial crisis going on? Well all be darn!

    http://www.anonweb.net.tc

  44. Correction: in a depression, not in a recession.

    The budget deal between Bush and the Democratic Congress restrained (but didn’t cut) spending while raising taxes.

  45. But Rush Limbaugh told me that this was the Obama Recession.

  46. I have a feeling the days od Democrats complaqining about “Republican deficits” are. Over now that THEY get to do the borrowing and spending.

  47. What? When this thing started he was still trailing Hillary in Iowa for fucks sake!

  48. BDB,

    Running a deficit during slowdowns and running a surplus in good times is standard Keyensian economics, and has been the stated position of the Democrats for decades.

  49. So why all the screaming back in 2001 that Bush’s tax cut would “blow a hole in the budget” then? That was during a recession.

  50. For the economists in the house, the apparently cloistered eggheads of the NELB use a different standard for recession than is generally accepted. Does that play into it? I find myself wondering whether there aren’t political aspirations at work, mindful of the difficulty certain other progressive demiurges had getting their economic recovery packages passed.

    The two consecutive quarters of declining GDP thing is a rule of thumb, not a hard and fast rule. There are other signs of a recession, such as tightening credit, reduced spending, shifts in unemployment, etc. The NEBR looks at the totality of the data rather than just the GDP number. Also, one should keep in mind, GDP going up 1%, in an environment of 3% inflation, is a decline in real GDP.

  51. So why all the screaming back in 2001 that Bush’s tax cut would “blow a hole in the budget” then?

    Because they were intended as long-term, structural changes that would outlast the recession. It wasn’t the FY2002 budget that was the worry, but the long-term, structural deficits.

  52. BDB,

    Either: a) the tax cut was made before the recession was official and people didn’t know it was a recession yet (it passed in June 2001, right at the start of the recession, but 6 months before it was called). b) Dems are hypocrites. Both are valid answers.

  53. AAAAA!!!! A recession! Eeeeek!

  54. Running a deficit during slowdowns and running a surplus in good times is standard Keyensian economics, and has been the stated position of the Democrats for decades.

    And low taxes and spending have been the stated position of the Republicans for decades.

    Don’t you think it’s time to dispense with the notion that the parties’ stated positions have anything to do with reality?

    The fact is that the economy as we know it today has become completely dependant on continued deficit spending ad infinitum.

    Every time the budget has even even approached being balanced since BIG ONE (depression or war – take your pick) there has been a slowdown afterwards.

    And every president who even tried to do it has been met with howls from the affected interest groups.

  55. Isaac Bertram,

    Don’t you think it’s time to dispense with the notion that the parties’ stated positions have anything to do with reality?

    I generally find it’s best to decide such things based on the facts that exist in objective reality, rather than some narrative about political parties.

    In this case, the Republicans have told us that they stand for low spending and low deficits at all times, and have done precisely the opposite. That is, the Republicans have been hypocrites, who ignored their stated principles.

    The Democrats have told us that they stand for balanced budgets during goot times, and deficit spending during recessions, and they have done exactly what they’ve said they will do, in accordance with their stated principles.

    I hardly think that the observation “but they’re both political parties, so they must be the same” carries more weight than the observable facts, which demonstrate a significant difference.

  56. The Democrats have told us that they stand for balanced budgets during goot times, and deficit spending during recessions, and they have done exactly what they’ve said they will do, in accordance with their stated principles.

    When has a Democrat controlled Congress passed a balanced budget?

    I guess we have been in perpetual recession since WWII.

  57. Last time that was tried in a recession: 1936. Ever see a chart of GDP growth during the 30s? Bad move.

    Of course, there were a few other policies being pursued at that time as well that might have had an effect on the economy.

  58. Believe it or not, joe, I am not simply faulting the Democrats for the sake of abusing them here.

    What I am saying is that we have become mired in a borrow and spend cycle over which neither party has any control. The economy as we know it has become totally dependent on this cycle of debt and spending.

    We long since passed the point of no return for doing anything about it without a serious and painful dislocation and adjustment.

    Of course when the whole thing collapses (as some seem to think is likely) the catastrophe will be that much worse.

    See, joe, in the end I agree. A Keynesian approach of fiscal stimulus (tax cuts and spending on infrastructure projects and direct cash relief) are probably the best course (of the ones politically available) at this time.

    We may in the end quibble about the size, with me likely arguing form more modest spending and wider and larger tax relief, but i agree you’re essentialy right.

    The problem is, that as we have seen since WWII, the need for stimulus never seems to come to an end.

    Because, when all is said and done, “stimulus” is usually how the party in power hands out its favors.

    Of course if you can just continue to yell “rah, team blue, boo, team red” that’s fine too. I think we’re kind of used to it.

  59. Most predictions of catastrophic doom have turned out instead to be problems that were muddled through and eventually worked themselves out (e.g. “Bankruptcy 1995”). So I am similarly optimistic (over the long term) about the current situation.

    Kohole,

    I would tend to agree with you on that estimation. The only thing that leads me to suspect otherwise are the trends of the United States on a balance sheet since 1970 or so.

    The public and consumer debt of the United States hasn’t just gone up in real terms since 1970, its slope on a graph is logarithmic over that time, kind of like the energy rise in a runaway chain reaction in a exploding nuclear weapon core. Interesting insight on the math of the nuclear weapon is that virtually all the energy in the resulting detonation is emitted in only the last four or five generations of neutron multiplication, the previous seventy-eight or so generations of neutron production was just to ramp up to that point; and that process is an apt metaphor for our own debt-o-nation (oh, what a bad play on words!).

    The borrowing this year, even sans bail out and wars, basically amounts to the operating budget of the United States Government outside of the “on-book” DoD budget and entitlement checks. Uncle Sam literally has to float a loan just to keep the lights on in Federal buildings that don’t look like a pentagon.

    Whats even more disturbing about that trend is that this nation’s own markets are tapped-out on buying Treasuries, we depend on foreigners to have an appetite for the things. Never before has the United States been facing insolvency before every Treasury bond auction, but that’s essentially what the process is. No one shows up at the bond auction and its a Brave New World relative to any historical precedent.

    Last caveat with foreigners is it takes away FDR-type options, because essentially the government cannot screw China out of being paid back what it has lent Uncle Sam. FDR could by executive fiat (apparently) take away everyone’s gold, tell them what the price of a dollar was, and tell them when and where to get those dollars. China is not such a captive market for ripping off as American citizens in respect to those types of manipulations. You add all that up, and the fact the Boomers are pulling the vote levers (and they will pull those levers for their entitlement checks, every time) more than any other group for the next ten years, and I see the ground through the clouds now, and Uncle Sam has no parachute.

    Unless someone invents controlled fusion tomorrow, there will be no economic engine from heaven that I see to stave this off, like it was with the internet in the 90’s (thanks Al Gore!) or the personal computer itself in the 80’s. A lot of Someone who is owed a lot of something is going to get screwed for this nation to remain solvent. Either it will be the boomer’s children who pick up the tab and expect no goodies themselves, or the foreigners for foolishly buying all those Uncle Sam Backed Securities (“toxic assets?”). The question now is do we pick the loser by fiat today, or let “market forces” beyond any single sovereign’s control make the decision for us down the road, “naturally?”

Please to post comments

Comments are closed.