2008 Recession Is Official

After nearly of a year of unofficial pronouncements of the country’s recession (see, for example, NPR: Official Or Not, Consumers Sense A Recession), media outlets across the country, earlier this month, announced that the recession is now official (see, for example, NPR: Recession Is Official).

So what’s the difference between an official and an unofficial recession? Unofficially, a recession could be classified as any “period of general economic decline.” Officially, a recession is a decline in “GDP for six months (two consecutive quarters) or longer.” (see recession definition at BusinessDictionary.com).

So all this talk of recession and GDP (Gross Domestic Product) growth got me thinking I should look at the data (see chart below), analyze it and see if I can find anything insightful. Here’s what I found:

  • There seems to be no correlation between GDP growth and the political party in the White House. (Which is unfortunate, for me, because I really like Republican economic policy platform of lower taxes, etc. much better than the Democrats.)
  • Economic down turns during an election year generally means the incumbent party in the White House will lose. This happened in 2008, 2000, 1992, and 1980. (Please note that I do not consider the president to be ‘Economist and Chief’, though that seems to be how the American people treat him.)
  • Average quarterly GDP growth, over the past 60 years, has been right at 3%.
  • The economic data does seems somewhat cyclical, with recessions hitting every 8 to 12 years.


    Sources:
    –Quarterly Growth in real GDP at annual rates, Percent
    http://www.economagic.com/em-cgi/data.exe/var/rgdp-qtrchg
    –“The current administration has compiled the worst economic record in 50 years.” -Bill Clinton, 1992, http://www.ibiblio.org/nii/econ-posit.html
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