Herman

Cain

Read Herman's bio and previous columns

December 8, 2008

Recession Started in 2007? Only If You Redefine Recession

We are in a recession, but it did not start a year ago.

The mental midgets at the National Bureau of Economic Research (NBER) want you to believe the recession did start a year ago. They arrived at this breaking news conclusion by ignoring the definition of a recession accepted by most respectable economists and business people.

Surprisingly, they admitted it in the article written by Emily Kaiser. (“Recession started in December 2007”, Reuters, December 1, 2008)

Instead of using two consecutive quarters of negative Gross Domestic Product growth as the quantitative benchmark for a recession, the NBER used “All evidence other than the ambiguous movements of the quarterly product-side measure of domestic production” to confirm their conclusion.

What evidence? They did not disclose that secret in the article.

Their conclusion was just what the mainstream media and Senate Majority Leader Harry Reid wanted to hear.

“The announcement simply makes official what we have long known – with rising costs of living, rising unemployment, record foreclosures and depleted savings – we must do more to help families make ends meet,” Reid said.

Translation, let’s pass another stimulus package to the taxpayers with their money, since the first one worked so well to keep us out of a recession.

When the “Massive Job Losses” report was issued on Friday December 5, 2008 by the Labor Department, the Economic Policy Institute (EPI) jumped on the “let’s redefine a recession” bandwagon so we will have even more headlines with which to depress the public.

The president of EPI, Lawrence Mishel, says too much emphasis is placed on GDP as a measure of economic growth.

Since we do expect to be technically and officially in a recession at the end of this calendar quarter, let’s redefine our way out of it. Namely, since consumer spending represents over 60 percent of the GDP calculation, let’s redefine $1.00 as $1.25. Retail sales would see an immediate bump of 25 percent and we would most certainly avoid a recession on paper.

Let’s help the struggling convenience store owner by redefining a gallon of gasoline as three quarts instead of four and charge the same price per gallon. Using the definition of a gallon that’s been around since dirt is probably too ambiguous for NBER and EPI.

In addition to giving Harry and Nancy more flawed justification to waste some more money on small $600 allowances to some taxpayers, proclaiming the recession started a year earlier could also help make President Bush’s record on the economy look even worse as he is leaving the White House.

It also allows President-elect Obama to proclaim in his first State of the Union address that the economy was worse than we thought. The mainstream media would then be able to give Obama a free pass for bringing no new ideas to the nation’s economic woes for at least two years.

During that time, the unprecedented actions by the Bush Administration would have started to work and the mainstream media would proclaim Obama having done a brilliant job of turning around the economy by doing absolutely nothing.

By the way, there is one more advantage of depressing recession reporting. It gives Harry and Nancy more time and ammunition to find a “happy face” for the bailout money they want to give to the Big Three U.S. automakers, while the UAW does absolutely nothing but dig in their heels.

That’s not ambiguous to me. It’s just depressing.

Click here to talk to our writers and editors about this column and others in our discussion forum.

To e-mail feedback about this column, click here. If you enjoy this writer's work, please contact your local newspapers editors and ask them to carry it.