A Christian Liberal is NOT an oxymoron.

Posted by XT on April 30th, 2008 in US News

The good news is that the economy is not in a recession – it is just growing at a rate so slow as to be almost invisible. A recession is an economic downturn marked by two consecutive quarters of negative (GDP) growth. For the last two quarters, the growth rate has been only 0.6 percent – which is NOT negative. Yay for us.

But – the eight-month recession of 2001 didn’t have two consecutive quarters of economic growth at all. Here is a chart showing the growth rate of GDP in 2000 and 2001 (source data (Excel file):

Quarter	Growth Rate
2000q1	1.0
2000q2	6.4
2000q3	-0.5
2000q4	2.1
2001q1	-0.5
2001q2	1.2
2001q3	-1.4
2001q4	1.6

No two consecutive quarters of negatives. But if there was a recession that stretched from March to November, then it must have been marked by a “negative-positive-negative” growth rate – in which case it should have been measured to have started in the third quarter (July) of 2000. Which is it? Did we have no recession, or did it start back in July of 2000 and last all the way through at least September of 2001?

By the definition, there was no recession. That’s easy enough to answer. The question then becomes why it would be marked as starting in March 2001and not July 2000. I don’t have an answer to that one, but the stats do point out one thing I’ve said for a while now – the effect of 9/11 on our overall economy was negligible. At the worst, the effects were shaken off in the following month/quarter.

Now the fact that we have gone from October 2001 through April 2008 without a negative growth period is noteworthy – but so is the fact that we went from March 1991 through July 2000 without a negative growth period. That was the last time we had anything that meets the official definition of a recession – here’s another small chart to present the data:

Quarter	Growth Rate
1990q2	1.0
1990q3	0.0
1990q4	-3.0
1991q1	-2.0
1991q2	2.6
1991q3	1.9
1991q4	1.9

Prior to October of 1991, the last quarter of negative growth occurred in the third quarter of 1982. Table time again:

Quarter>	Growth Rate
1981q1	8.4
1981q2	-3.1
1981q3	4.9
1981q4	-4.9
1982q1	-6.4
1982q2	2.2
1982q3	-1.5
1982q4	0.4
1983q1	5.0

By definition, there was a two-quarter recession from October 1981 through April 1982. But the we get that neg-pos-neg pattern before and after that period – so maybe it was from April 1981 through October 1982. Hmmm, looks like it was the latter.

Prior to that, the US economy had a recession from 1974q3 through 1975q1, with the neg-pos-neg pattern reaching back to 1973q3. Which means the mid-70s recession was either nine months or a year and a half. The correct answer is nine months.

Reaching back more (there’s a point to all of this), there was a single negative growth quarter in 1970q4 and a six-month negative turn in 1969q4-1970q1. Before that, you have to go all the way back to 1960q4 and -q2 (our neg-pos-neg trend) to find a downturn. The point is two-fold. First, the definition of recession is not a solid as some would want it to me (like me – fluid definitions are not actually definitions). Second, whatever definition of “recession” one uses, it isn’t necessary to have a recession for a lot of people to suffer. Anyone who has lived through the 1970s and 1980s can attest that harship was not limited to the time periods identified. If anything, the negative periods of growth are just an indication that fairly widespread hardship was being experienced prior to that period.

It should also be apparent that, while 0.6 isn’t negative, two consecutive quarters of near-zero (anything less than 1.0) growth is pretty rare (in fact, the last time it happened was the first half of 1979). So is the fact that 0.6 has been our growth rate in three out of the last five quarters. The overall growth period for that time is a rather anemic 2.1 percent. Looking at annual growth rates, the years in which we’ve averaged less than 2.5 percent growth (in my lifetime) are 2002, 2001, 1991, 1990, 1982, 1980, 1975, 1974, and 1970. Only nine times in the last forty years have we had growth rates as low as we are seeing now.

What does this all mean? Only what we know already – some people are suffering and some are not, but the suffering is widespread enough to show an effect on the entire economy (just not enough to cause a “real” recession).

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