NBER: Recession Began in December 2007

[donsutherland1]

The National Bureau of Economic Research (NBER) concluded that the U.S. economy peaked in December 2007. In its statement, the NBER cited a range of data for reaching that conclusion.

The NBER explained:

Because a recession is a broad contraction of the economy, not confined to one sector, the committee emphasizes economy-wide measures of economic activity. The committee believes that domestic production and employment are the primary conceptual measures of economic activity.

The committee views the payroll employment measure, which is based on a large survey of employers, as the most reliable comprehensive estimate of employment. This series reached a peak in December 2007 and has declined every month since then.

The committee believes that the two most reliable comprehensive estimates of aggregate domestic production are normally the quarterly estimate of real Gross Domestic Product and the quarterly estimate of real Gross Domestic Income, both produced by the Bureau of Economic Analysis. In concept, the two should be the same, because sales of products generate income for producers and workers equal to the value of the sales. However, because the measurement on the product and income sides proceeds somewhat independently, the two actual measures differ by a statistical discrepancy. The product-side estimates fell slightly in 2007Q4, rose slightly in 2008Q1, rose again in 2008Q2, and fell slightly in 2008Q3. The income-side estimates reached their peak in 2007Q3, fell slightly in 2007Q4 and 2008Q1, rose slightly in 2008Q2 to a level below its peak in 2007Q3, and fell again in 2008Q3. Thus, the currently available estimates of quarterly aggregate real domestic production do not speak clearly about the date of a peak in activity.

 

[Simon W. Moon]

It's Obama's fault.

sorry couldn't resist
​

 

[Goobieman]

It's Obama's fault

Given that the liberals blamed Bush for the recession that began well before he took office.... seems fair to me.

 

[GOP Socialist Soldier]

But McCain was telling us the "fundamentals of the economy are strong." Huh?

YouTube - "Fundamentals" Ad

 

[SWM]

Wait, are there people actually saying that Obama caused the recession now? I need to keep up with things.

 

[donsutherland1]

But McCain was telling us the "fundamentals of the economy are strong."

Senator McCain made a mistake that is fairly common when the economy is nearing or moving into recession, even a severe on. In the case of 2008, the financial crisis was rapidly intensifying and the economy was deteriorating quickly.

The following are four examples on the eve of the Great Depression:

The New York Times, October 23, 1929:
The decline in stock market values has carried prices of many issues below their true values, according to Charles N. Mitchell, chairman of the National City Bank, who returned yesterday from a month's trip to Europe. Mr. Mitchell said that he considered conditions in this country fundamentally sound...

The New York Times, October 26, 1929:
In his address as president of the institute [American Iron and Steel Institute], Charles M. Schwab, chairman of the Bethlehem Steel Corporation, asserted hat the steel industry, in the many years of his association with it, had never enjoyed "greater stability or a more promising outlook, as it approached the end of a record year."

"This fundamentally sound condition [of the steel industry] is largely responsible for the uniform prosperity which has been shared by all banches and all companies in the industry. It is significant that the industry's favorable showing has not been due to higher prices; our improved earnings are due to three factors: greater demand for steel, enlarged output and lower costs."

The Wall Street Journal, October 26, 1929:
"Business is fundamentally sound," said Alexander Legge, chairman of Federal Farm Board. "Outlook for business is good, and aside from depression of the stock market there is nothing to worry about."

The Wall Street Journal, November 1, 1929:
The sun is shining again, and we will go on record as saying some good stocks are cheap. We say good stocks are cheap because John D. Rockefeller said it first. Only the foolish will combat John D.'s judgment... Mr. Rockefeller says things are fundamentally sound.

Had Senator McCain had a stronger economic team, he might well have been able to overcome the fallout from his initial diagnosis. After all, senior policy makers are not expected to be prescient.

Where I believe he doomed his prospects is that his campaign began to panic in the face of an economic situation it did not understand very well. As a result, his campaign's decisionmaking became chaotic and erratic. During that time of panic, he suspended his campaign, postponed his participation in the first Presidential debate until a financial rescue package was agreed upon, and then reversed his decision not to participate in the debate even as no agreement had been reached on draft financial rescue legislation.

At a time when a nation faces great challenge--and this is likely the biggest challenge the U.S. has faced since the start of the Cold War--the public turns candidates who exude a measure of confidence. They crave a candidate who offers the prospect of imposing order on chaos. Senator Obama's campaign proceeded methodically and cautiously during the financial crisis. It exhibited no indications of panic. In the end, I believe it was the starkly contrasting performances of the two campaigns on this election's most important issue that sealed the outcome.

 

[Ethereal]

They crave a candidate who offers the prospect of imposing order on chaos.

Yea, Obama is just going to grab that recession by the arms, slam it up against the wall, and have his way with it!

"Shhhhhhh! Shhhhh-Shut up, b*tch! You just be quiet and it'll go fast. Don't make me cut you! Just...relax. Yeaaaaa, you dirty little recession, you. You like decreasing domestic production, don't you? Mmmmmmm, my stock market is rising! Oh! Oh! YAAAA! WOOOOO! Woooo, damn! Recession over."

 

[donsutherland1]

Yea, Obama is just going to grab that recession by the arms, slam it up against the wall, and have his way with it!

Of course, it was a matter of perception among voters. Although the national exit polls didn't ask any questions on leadership, it did focus on who had the "right judgment" and by a 57%-42% margin voters said that Obama possessed such judgment, while they split 49%-49% on McCain.

Prior to the election, in the September 5-7 ABC News/Washington Post poll, McCain led Obama 48%-44% when asked who is the "stronger leader." Just after Senator McCain's unsteady performance--a meltdown is probably closer to what happened--on the financial crisis, the advantage shifted to Obama by 4 points. In the last poll taken (10/8-11) on that attribute, Obama led 54%-40% on that question. I don't believe one can overstate just how devastating Senator McCain's performance on the financial crisis was.

Of course, perception and reality can be two different things. Expectations are likely quite high for President-elect Obama, given the prominent economic policy team he appointed. However, the recession will probably last for at least another 2-3 quarters and perhaps longer. A persistent recession could take a toll on Obama's approval ratings, as happened to President Reagan's during the 1981-82 recession. Afterward, just as happened with President Reagan, his approval ratings could rise with the economy.

Immediately following his inauguration, I suspect that President-elect Obama will seek to make some big decisions. A large (possibly $500 billion or so) stimulus package is probably a good bet and his advisors are already coordinating the development of such a package with Congressional leaders. An emergency small business lending facility remains a possibility.

 

[Goobieman]

Wait, are there people actually saying that Obama caused the recession now? I need to keep up with things.

Given that the liberals blamed Bush for the recession that began well before he took office.... seems fair to me.

 

[UtahBill]

What we have here is the end result of trickle down economics, and only now are we discovering that what is trickling down is crap.
Call it DOODOO ECONOMICS...:2razz:

 

[Goobieman]

What we have here is the end result of trickle down economics, and only now are we discovering that what is trickling down is crap.

Hmm...
Trickle-down began in 1982 and has been in place ever since.
Doesnt that necessarly mean that the strong economies ot the 80s 90s and 00's owe itself to trickle-down as well?
Given that, how is trickle-down 'crap'?

And, if you're right, doesn't that mean that the solution for the problem we have now is to hike taxes back to the levels of 1981?

 

[Iriemon]

Hmm...
Trickle-down began in 1982 and has been in place ever since.
Doesnt that necessarly mean that the strong economies ot the 80s 90s and 00's owe itself to trickle-down as well?
Given that, how is trickle-down 'crap'?

Hmmm...

The economy in the 50s and 60s performed on average far better than the 80s and 90s, and the 70s far outperformed the 00s.

So doesn't that mean that the weak economies of the 80s, 90s, and the anemic economy of the 00s owe itself to trickle down as well?

Given that, how is trickle-down not "crap"?

And, if you're right, doesn't that mean that the solution for the problem we have now is to hike taxes back to the levels of 1981?

That certainly could be one conclusion. The country has done very well in periods when the government was fiscally responsible.

 

[UtahBill]

Hmmm...

The economy in the 50s and 60s performed on average far better than the 80s and 90s, and the 70s far outperformed the 00s.

So doesn't that mean that the weak economies of the 80s, 90s, and the anemic economy of the 00s owe itself to trickle down as well?

Given that, how is trickle-down not "crap"?



That certainly could be one conclusion. The country has done very well in periods when the government was fiscally responsible.

what a concept!! of course, the rich had to get richer on a slower pace, but they still got richer...:roll:

 

[Goobieman]

what a concept!! of course, the rich had to get richer on a slower pace, but they still got richer...:roll:

Trickle-down began in 1982 and has been in place ever since.
Doesnt that necessarly mean that the strong economies ot the 80s 90s and 00's owe itself to trickle-down as well?
Given that, how is trickle-down 'crap'?

And, if you're right, doesn't that mean that the solution for the problem we have now is to hike taxes back to the levels of 1981?

 

[Iriemon]

Trickle-down began in 1982 and has been in place ever since.
Doesnt that necessarly mean that the strong economies ot the 80s 90s and 00's owe itself to trickle-down as well?
Given that, how is trickle-down 'crap'?

And, if you're right, doesn't that mean that the solution for the problem we have now is to hike taxes back to the levels of 1981?

Is there an echo in here?

 

[UtahBill]

Is there an echo in here?

My hearing is bad enough without reverb....:lol:

 

[Pinu7]

Hmm...
Trickle-down began in 1982 and has been in place ever since.
Doesnt that necessarly mean that the strong economies ot the 80s 90s and 00's owe itself to trickle-down as well?
Given that, how is trickle-down 'crap'?

And, if you're right, doesn't that mean that the solution for the problem we have now is to hike taxes back to the levels of 1981?

Actually no, in the begging of the Clinton administration( I was a few months old then) he raised the top tax rates. That is not supply side economics. That combined with the Earned Income Tax Credit had undermined trickle down. This is "trickle up"(if that is an eco term) and led to an increased amount of consumerism in the 90s which kept the economy growing. I am not saying President Clinton is entirely against Trickle up but nowhere near as much as Reagan, and the two Bushs.

I am not enthusiastic about the idea of trickle down since not all of it will go into the middle class and creating jobs so it is not very efficient. The exception is small business, that is where trickle down is usually effective.
Of course, I am not advocating to go back to the days of Carter, but in between. I think that right now most tax cuts should go to the middle/lower class .

 

[Goobieman]

Actually no, in the begging of the Clinton administration( I was a few months old then) he raised the top tax rates.

Um.... no.
In 1981 Reagan cut the top marginal rates from 70% to 50% and then from 50% to 28% in 1986
Clinton raised them from 31% to 39.6%
Thus, the Clinton tax hike did not end the supply-side policy of RWR.

 

[Iriemon]

Um.... no.
In 1981 Reagan cut the top marginal rates from 70% to 50% and then from 50% to 28% in 1986
Clinton raised them from 31% to 39.6%
Thus, the Clinton tax hike did not end the supply-side policy of RWR.

First time I've ever heard someone arguing that raising taxes 30% was keeping with supply side theory.

 

[Kushinator]

The common feeling around the big earning Hollywood types is that they are willing to pay higher taxes if doing so will help rebuild the country. I hear it almost every night on Leno, Conan, etc... as their guests give an opinion of our situation. Not that celebrities have anything groundbreaking to say about this crisis, but this seems to be the feeling i am observing.

With that in mind, given the current perception of government debt, attempting to balance the budget by the end of Obama's first term would do wonders for crowding in private investment. I am not actually worried about the nominal value of government debt because 75% of it is held internally, which means we are for the most part paying interest to ourselves. If that number goes lower than 75%, we will begin to see the effects of crowding out private foreign investment, and will eventually be repaying foreign debt by exporting production.

A trillion dollar deficit will also crowd out private US investment and this will eventually take a toll on our overall productivity, and with it our standard of living. Therefore, i believe you must give a two year corporate tax holiday, hold the capital gains where it is, and set a more intimate level of progressive taxation that trickles up to 50% on those making over $50 million annually. You then cut the middle class tax rate (under $250,000) in half. Keep in mind a person making over $50 million would not actually pay $25 million in taxes.

Doing so achieves a mixture of desired results. First it gives middle class Americans, those who are having trouble paying their bills, much more breathing room. Secondly, it allows for increases in government spending to be offset in higher tax revenue. Combine this with cutting indiscretionary spending and the deficit will disappear; which will begin to chip away at the stock of debt. This will open up more private investment (lending) and spare me from listening to anymore of this "national debt" jargon i constantly hear. :2razz:

NOTE: Legislation would have to be enacted that does not allow a person to transfer their income into a corporate entity for 3 years. That way, Lebron James cannot start up Lebron James LLC, and siphon his income through a low taxed corporate entity.