29 September 2010
...
According to the traditional chronology, the recession ends when the economy
starts growing again, not when it has grown so much that indicators such as
real GDP per person are back to making new all-time highs. As a matter of
arithmetic, the latter standard would always give you a later date than the
true low point for economic activity, and a substantially later date in the
case of a downturn as deep and recovery as sluggish as the one we've just
experienced.
Economists have used the term "recession" to have this particular meaning--
the episode between a peak and trough-- for 150 years or so of data. Are
Warren Buffett and the common-sense Americans on whose behalf he claims to
speak within their rights to suggest that we have been using the term
inappropriately? I would say that they're very much justified in having an
opinion on this, because the events that economists label as recessions are
universally understood to affect everyone's lives. So it's quite appropriate
that everyone feels entitled to talk about what the word "recession" should
mean on the basis of personal and direct experience. People know they're
still not back to where they were, and the data confirm that. But when
economists say that the recession is over, there never was a claim that
things were back to normal.
...
full text at:
http://www.econbrowser.com/archives/2010/09/when_do_recessi.html
No comments:
Post a Comment