[B]y my book, U-6 is now telling us that we are in a recession.I'm going to see if I can't preorder this book on Amazon.
But I am not on the NBER Business Cycle Dating Committee. There's no reason for them not to wait a couple more months before deciding thumbs-up or thumbs-down. And they may not, by their definition, call it a recession.
On the other hand, when I write my history--Macroeconomic Policy in the Age of Central Bankers (Princeton: Princeton University Press, 2025)--this will count as a recession starting in the last quarter of 2007.
On the other hand, Jim Hamilton at EconBrowser says "not so fast." (Hey, what if someone started a blog called "Econ Bowser" which featured both economics and Super Mario Brothers boss references? How totally awesome would that be? You say not awesome at all? Hmmm.). First, Jim parses the GDP growth data, and points out the good news. The weak dollar continues to push up exports and push down imports, which right now is the medicine the doctor ordered. Had net exports not increased, due to the weak dollar, real GDP actually would've been negative. I bet John McCain is glad to hear that his campaign is still alive thanks to the weak dollar. Housing continued to pull down growth, but if you exclude the effect of the contracting housing construction, growth was actually extremely high. I suppose there's good news in that somewhere.
As I've mentioned before, Hamilton uses an algorithm he calls the "recession probability index" to determine using current data whether the economy is in a recession. Although the index has crept up to almost 50%, historical data fitted with this algorithm leads him to believe you're not in a recession unless the index reaches 66%. So, as of Q1:2008, no recession. Uncle Tupelo continues being proud.
I'm going with Jim Hamilton's probability index over Brad DeLong, given that Hamilton's index uses all the economic indicators, whereas Brad is focusing just on U-6.
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