SubscribeShocker: Economists Say No US Recession
From a deeply saddened Associated Press:
Economists see US avoiding recession
By ALEX VEIGA AP Business Writer
03/11/2008
LOS ANGELES—The U.S. economy will suffer as the slumping housing market eats away at job creation and consumer spending, but the nation should avoid slipping into a recession this year, according to a new economic report.
A recession could still happen though, if the credit crisis that has stifled the housing market deepens, preventing consumers from buying big-ticket items like cars and businesses from spending on equipment, according to the quarterly Anderson Forecast by the University of California at Los Angeles.
“We don’t see that happening,” said Edward Leamer, director and co-author of the forecast released Tuesday. “This is a tough call, but I will be very surprised if this thing actually precipitates into recession.”
The forecast anticipates job growth remaining sluggish in 2008, with the U.S. unemployment rate rising to 5.5 percent by the end of the year. The February rate was 4.8 percent.
The forecast expects the economy to post gross domestic product growth of about 1.5 percent this year, rising to about 3 percent growth in 2009. GDP grew 2.2 percent in 2007, the weakest showing in five years.
The no-recession forecast runs counter to the outlook among many economists and financial pundits, who contend the economy has already started to shrink amid rising unemployment, job losses, record oil prices, and the lingering effects of the housing and credit crises.
The U.S. lost 63,000 payroll jobs last month, the second consecutive month of job losses. The last time the U.S. posted a two-month drop in payroll jobs was in 2003, when employers were still struggling through the aftermath of the 2001 recession…
Of course this is the first and last we will hear any kind of good news until after the elections are safely over.
And yet the Associated Press keeps trying:
The U.S. lost 63,000 payroll jobs last month, the second consecutive month of job losses. The last time the U.S. posted a two-month drop in payroll jobs was in 2003, when employers were still struggling through the aftermath of the 2001 recession.
Er, never mind that unemployment actually went down last month to an astounding 3.8%.
And never mind that even a rate of 5% unemployment was deemed impossible during the halcyon days of the Clinton administration.
The AP doesn’t want its readers to know such troubling details.
Indeed, look at what Google news presents as the latest unemployment news. Things sound worse than during the “Great Depression.”
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8 Responses to “Shocker: Economists Say No US Recession”
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March 11th, 2008 at 2:34 pm
The Fed should be more concerned with inflation than a recession. Fed Funds rates have been cut over the last six montsh, the dollar is weak, and commodity prices are rising…there was a slow down, no doubt, but how could we sustain the +4.6% GDP growth in Q3? Inventories were depleted in Q4, which is why GDP growth was only at 0.6%, but at some point, inventories will have to be replenished. Also, the summer construction season is approaching, just in time for all this easy credit to finally kick in. We could have a very robust economy right around November….hopefully without a lot of inflation, but I’m a bit concerned…about inflation, not a recession.
March 11th, 2008 at 4:16 pm
“unemployment actually went down last month to an astounding 3.8%”
I’m not an economist but that looks pretty damn good to me. How many countries could claim 3.8%?
One problem I have is the cost of gasoline for which I’m spending $500 plus each month (ouch! it hurts just to say it). Maybe when Uncle Bush sends me that refund check I can stock some up in mayonnaise jars.
March 11th, 2008 at 8:17 pm
The frustrating thing among all those who say we are headed for or are already in a recession is that a recession is defined as two or more quarters with a negative GDP.
We have not yet had one; note the 2007 figures above show GDP grew by 2.2%.
March 13th, 2008 at 11:03 am
The reason why the unemployment rate dropped while payrolls fell by 63,000 is the result of how the labor force is defined by the BLS (the department that computes these statistics). The BLS stops considering people to be part of the labor force once they have given up on finding a job. To remain in the labor force, a person who lost his job or quit his job has to have been actively seeking employment in the past four weeks by applying for jobs, submitting resumes, or doing something else the BLS considers active. The details are at http://www.bls.gov/cps/cps_htgm.htm .
In his blog, Mish breaks down the job report and explains why the details are worse than the headline numbers: http://globaleconomicanalysis......-jobs.html
The “unlabor force” has risen by 644,000 “unworkers”.
Also,
March 13th, 2008 at 11:25 am
I guess nobody ever gave up and stopped looking for work during the eight years of the Clinton administration.
March 13th, 2008 at 11:50 am
^ Yes, the BLS used similar definitions for “labor force” and “unemployed” during the Clinton Administration. My post was intended to be informative, not partisan sniping. I don’t think that Bush is directly to blame for the housing bubble and mess in the credit markets any more than Clinton is to blame for the dot-com bubble.
March 13th, 2008 at 2:11 pm
Dave2882
Something jumped out at me seeing those numbers.
– Construction Jobs Fell 39,000
– Manufacturing Jobs Fell 52,000
– Goods Producing Jobs Fell 89,000
– Private Sector Jobs Fell 101,000
– Government Jobs Rose 38,000
All fell but Govt. jobs rose. I have a feeling this will skyrocket after November and govt. jobs are like leeches to the private sector they depend on for tax revenue. A lady friend of mine was just telling me about her economic worries recently. She’s 3 months pregnant (I didn’t do- I was at the movies) and she wants to raise her child at home as opposed to daycare. The problem, of course, is being able to afford it. She asked, “Why does it just keep getting harder and harder to do this? My mother raised us with only my father working.” I asked her to remember the size of government back then and look at it now.
March 13th, 2008 at 4:30 pm
Here’s another reason not to trust NPR, they report bad numbers. The actual unemployment rate was 4.8%, not 3.8%. Not that 4.8 is a number to sneeze at; it still represents a drop from 4.9% over January. The official stats are found on the home page of the BLS at http://www.bls.gov