Are you confused about the current economic conditions? Are we in a recession or aren’t we? Some economists are calling it a recession others are not. As the Dallas News points out:
It isn’t driven by the usual business cycle; it was brought on by severe nationwide problems in the housing sector, which have spread to banking and finance, drying up consumer lending.To further muddy the waters, there is a difference between recession in the overall economy versus local economies. Again the Dallas News points out:
Using June data, Moody’s estimates that 170 metro areas are in recession. Together, they make up about 43 percent of metropolitan employment nationwide. That’s up from 142 metropolitan areas in May.As the article points out, how the recession is being felt will largely depend on where you are. Certain areas are still doing reasonably well – oil rich Texas and Oklahoma being among them. Other areas that have strong ties to energy and/or technology are tending to weather the recession reasonably well. Other areas such Arizona and much of California, which are having high foreclosure rates are not weathering so well.
The barometer traditionally used for measuring recession has been the GPD (Gross Domestic Product). When the GDP growth is negative for two or more consecutive quarters, that has been the classic recession indicator. That condition hasn’t occured yet. Yet this economic downturn defies that because there is so much recession-like effect reverberating throughout the economy. Does this mean economists should begin to think about changing their model? What do you think? Leave your comments and let us know.