Significant chance of recession next 2 years: SF Fed

[OhioChick]

Source: Reuters

10 Aug 2010, 0115 hrs IST,REUTERS

CHICAGO: There is a "significant" chance the US economy will slip back into recession in the next two years although a reversal is unlikely in the next few months, researchers at the San Francisco Federal Reserve Bank said on Monday.

The probability of another recession over the next 18 to 24 months is higher than that of expansion, researchers said in the latest issue of the regional Fed bank's Economic Letter.

Concern has risen in recent months that the United States might be headed for a 'double-dip' recession as measures of consumer spending and confidence have dropped and private company hiring has fallen short of expectations.

The soft economic data will be top of mind tomorrow when members of the Fed's monetary policy-setting committee meet. Recent comments from Fed officials signal strong disagreement over whether the Fed -- the US central bank -- should move to offer further support to the economy than it already has.



Read more: http://economictimes.indiatimes.com/markets/global-markets/Significant-chance-of-recession-next-2-years-SF-Fed/articleshow/6284541.cms

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"slip back into recession?"

Didn't realize we were out of a recession.

[zipplewrath]

1. Technically, we are

3 quarters of negative growth or some such rule. We've had positive growth for some number of quarters now.

The language probably ought to be changed to something having to do with job growth or employment or something, because we go through this every time, people declaring that the recession is over, and the jobs never return, and then the next recession comes along.....

[Downwinder]

4. Does that mean that virtually we are out but in real time we are not?

[zipplewrath]

9. it means we've stopped shrinking

But it's a bit like saying that your house fire is out, and someone brought over a few pieces of used furniture, so "things are getting better", but your house is still a smoldering mess. Ya have to hope it don't rain until you get a roof back up.

[unblock]

8. this is the problem: standard definition vs. a more precise definition vs. a layperson's definition

standard definition of a recession: 2 consecutive quarters of negative gross domestic product. there's the arbitrariness of the calendar cutoffs (two very bad months surrounded by small growth make a recession if the bad months are march & april, but not if they are april & may; conversely, 7 bad months bookended by 2 phenomonal months aren't a recession if the 7 months are february through august, but not if they are march through september). then there's the complete disregard for the DISTRIBUTION of growth within the economy. if there's enough growth in one sector, or one region, or one business even, then that's positive gdp growth, even if the rest of the economy is reeling.

it's the old joke about bill gates walking into a packed auditorium and suddenly the average person is a millionaire.


a more precise definition: the unofficial "official" artbiter of recession is the national bureau of economic research. they look at many factors, gdp is only one of them, hence they can be more precise and more subtle than that "standard" definition. for better or for worse, they trade speed for accuracy -- their dating of the start and ends of recessions have strong support as being accurate, but in order to get that accuracy they wait for the "final final" figures on all the economic statistics they look at, meaning their determinations are many, many months after the fact.


then, of course, there's the layman's interpretation of a recession: i've lost my job! all kidding aside, when an economist tells you that the economy as a whole is improving, it's little comfort if you still can't find a job. the bottom line is that the layman doesn't care if the economy is improvING. the layman cares if the economy HAS IMPROVED to where it was, or at least to where it needs to be support the layman.

[zipplewrath]

11. Definitions

A recession is when your neighbor loses his job. A depression is when you lose your job.

My father was a teenager in the Great Depression. He had a papaer route and saw up close the ravages of that economic period. His father was a postal carrier, so he was safe and comfortable. But on his route there was a real "binary" reality out there. The folks that had jobs were safe and comfortable. The jobless were in living hell. They lived, side by side, in two very different realities. And as it wore on, someone would get a job and take that one, short, step across the divide and their whole life would change, virtually overnight. It created a very charitable spirit in him, because he saw their faces, knew their kids, and could see the capriciousness of it all. One foot in heaven, the other in hell.

The current batch of conservative free market jackasses never had to live through such a thing. They never have had to watch their neighbor, their brother, their teacher, lose their job and descend into a hell not of their making. They excuse those who are jobless as somehow being "at fault" for their condition. They pretend that the vast majority of people are somehow not mere victims of the economy, but willing participants in the destruction.

It's sick, and the clinging to silly definitions of recession, and GDP, and the movement of various market indexes is merely an attempt to ignore the very real human suffering all around them. Otherwise the "solutions" to our current condition would be obvious. Put people back to work. We'll balance the books later.

[unblock]

13. today's republicans wouldn't respond to such misery if it were right in their face.

they've proven themselves quite adept at ignoring realities that get in the way of their greed.

[DJ13]

2. Didn't realize we were out of a recession.

They dont mean us, the average person.

They're only concerned that the wealthy might feel some more pain in the next two years.

[ixion]

3. Yeah... "slip back into".. right

you have to exit the recession before slipping back in. We're just getting started on this very bumpy, possible brutal, ride.

[The Northerner]

6. +1

[alp227]

5. That means no jobs for the 99ers? (those w/o job for 99+ weeks)

This study is hardly a surprise.

[Hawkowl]

7. WTF are we in now?

The Fed is always behind in prognostication. By the time it says watch out for a recession, it's already here. So considering that with 9.6% "official" unemployment right now, the Fed is indicating a future or continuing recession, (this is always decided by revisionist historians to protect the people from bad news), it looks like a full blown depression is probable. Yeah, you think THIS is bad now, just wait.

[Skittles]

15. GET WITH THE PROGRAM, HAWKOWL

we have, you know, RECOVERED......it's a JOBLESS RECOVERY but it's still a RECOVERY......and, most of that gulf oil spilled, well, it has EVAPORATED......also, that health care bill, well, it's NOT GREAT but, you know, IT WILL GET TINKERED WITH.....and.....aw fuck, I don't know WTF we are in now either, besides one fucked-up BIZARRO WORLD :mad:

[jtuck004]

10. The NBER has not identified the end of the 2007 recession...

There are a huge number of interpretations of how a "recession" or "depression" are identified. A lot of them are fluid because of political considerations. A few are popularized by those who speculate in the markets, nothing more than "bets", designed to try to catch the trough of a dip so as to maximize profits - and not always reliable, especially since "data" is often revised after the fact.

One organization which relies on seeing things after they have happened is the NBER. After all the data is in and revised, they make a determination, not based solely on GDP, which, for example, may confuse government stimulus with private business activity. The NBER approach provides a more thoughtful analysis, explained here...

And as of today, partly because of our continued high employment, their analysis says we are still in the recession which began in 2007.

NBER COMMITTEE CONFERS: NO TROUGH ANNOUNCED

CAMBRIDGE, April 12 -- The Business Cycle Dating Committee of the National Bureau of Economic Research met at the organization’s headquarters in Cambridge, Massachusetts, on April 8, 2010. The committee reviewed the most recent data for all indicators relevant to the determination of a possible date of the trough in economic activity marking the end of the recession that began in December 2007. The trough date would identify the end of contraction and the beginning of expansion. Although most indicators have turned up, the committee decided that the determination of the trough date on the basis of current data would be premature. Many indicators are quite preliminary at this time and will be revised in coming months. The committee acts only on the basis of actual indicators and does not rely on forecasts in making its determination of the dates of peaks and troughs in economic activity. The committee did review data relating to the date of the peak, previously determined to have occurred in December 2007, marking the onset of the recent recession. The committee reaffirmed that peak date

here... and more here...

[L0oniX]

12. If they only had a brain.

[Demeter]

14. Instead of the Current Depression? That WOULD Be an Improvement!

I can hardly wait.

[snot]

17. good one!

[TheWatcher]

16. And it will be and "Unexpected" one which "No One Could Have Foreseen"

I feel sorry for anyone who actually believes this Orwellian, Intellectually insulting, poisonous garbage Propaganda anymore.

I'm beginning to think people actually like and WANT the abuse.

Our Serf Training is coming right along.

[neverforget]

18. It's always unexpected and unforseen when the people who set policy

and the pundits who yap about it are part of the upper class. For them, things are great so they have a hard time relating to us small folks who work for a living.

[No Elephants]

19. It's not called a "recession" any more. Now, it's the "new normal."

Recession--think of ocean water receding from the shore when the tide goes out. At some point, it stops receding, but that does not necessarily mean we are instantly back at full high tide.

Because our jobs have been going out of the country or being eliminated, we may never be back at full high tide. However, that does not mean the tide is always receding.

IOW, don't get too excited (or depressed) over the term "recession." A recession being over doesn't mean things are great.

[fasttense]

20. There was GDP growth during the 1st RepubliCON Great Depression.

After 1933, GDP grew. But the Depression still continued at least another 6 years.