REALonomics: Recession!
Posted by REALonomics on January 22nd, 2008
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real estate business models in the consumer-centric era
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Everyone: We’ve been asked what this post means. REALonomics believes we have been in a recession for about 60 days and perhaps as long as 120. With the International markets reeling, the Fed cutting .75, the financial crisis and congress trying to “stimulate” we decided to out ourselves as recessionists. We are going to have to go through the door of recession in order to get to our future. Your thoughts?
Without hard data, saying we are ‘in a recession’ is like crying wolf just because you are looking for attention. A recession is defined very clearly. The definition of a recession is ‘negative GDP growth for 2 quarters’. While the economy is clearly slowing, a recession is not yet demonstrated by the numbers.
With respect to real estate, it has been in a ‘recession’ for over 2 years in our area (Northern California), but using that as a bellwether for for overall economy is ludicrous.Other parts of the economy have been doing well.
Is a recession on the horizon? Perhaps. If the Fed keeps interest rates thta promote growth without exacerbating inflation, in the administration and Conpress can pull their heads out of their collective rear ends and do something positive to stimulate the economy (a lowering of payroll taxes would have the quickest and most impactful benefit to the economy), anf the media to knock off trying to sell us on the end of the world, we might avoid a recession.
Cry Wolf somewhere else!
John - The old definition of “recession” held up during the decades where foreign economies had less impact on the US Economy. We are now impacted by the global aspects of our economic models and actions. Thus, REALonmics believes we entered a national recession based upon many factors, not just the old “we had two bad GDP quarters therefore, we are in a recession.” We are not crying “wolf” at all, indeed this post was drafted days prior to publication. We also believe the Fed may be hurting us more with too much cheap money. What’s your thinking on that topic? Thanks for the critical thinking! - REALonomics.net