I guess someone forgot to tell the unemployment rate

[awdougherty]

http://money.cnn.com/2003/07/17/news/economy/recession.reut/index.htm?cnn=yes

Isn't this great? With just a simple declaration, everything is better. I hearby declare the end to my student loans and nukes in North Korea and STDs.

[Jim F.]

Wow, I simply love this line...


Members of the panel, widely accepted as the arbiter of U.S. business cycles, had said determining when the recession ended had been complicated by the surprising gains in the productivity of U.S. businesses, which had enabled firms to boost output while laying off workers.


In other words... even more money is focused at the top of the food chain. Businesses are making more product with less people, enabling them to make greater profits. Combine this with the recent tax cuts, and it's just a great time to own a large business.

I doubt we're seeing any reduction in price for items at the end market, even though the supply line is now able to produce items cheaper. Although I spose if the companies were to reduce prices based on the reduction in costs, we'd hear cries of deflation. Also, I doubt there is an increase in pay for the workers who are still employed, since that would negate the cost savings derived by the recent layoffs.

(this is all my opinion and can't be backed by actual facts. Most of these opinions come from my cynical view of modern business practives)

[Jason McCullough]

Recession dating doesn't deal too well with high productivity.

[Robert Sharp]

Interestingly, all the economy really needs is some optimism that it is getting better. If people become convinced that recession is over, then they will invest (and hire, etc.) and the recession actually will be over. Personally, I don't mind a few twistings of the truth if it accomplishes that. Apparently, people can't be taught how to avoid emotional investing, so I guess we will just have to learn how to manipulate it properly.

[Cleve Blakemore]

Remember the fake recovery in 1931 reported in the media. A few months later, the people of the United States went on a wild and crazy ride straight downhill economically which ended up with FDR having to physically confiscate gold door-to-door to protect ZOGbux.

Wanna know something? This time around it will be a thousand times worse than 1931.

[TimElhajj]

ZOGbux!

[Jason McCullough]

Interestingly, all the economy really needs is some optimism that it is getting better. If people become convinced that recession is over, then they will invest (and hire, etc.) and the recession actually will be over. Personally, I don't mind a few twistings of the truth if it accomplishes that. Apparently, people can't be taught how to avoid emotional investing, so I guess we will just have to learn how to manipulate it properly.

Recessions occur more by everyone simultaneously making the "right decision" to spend less money - because, you know, the economic outlook is uncertain, so it's best to hold off. Makes perfect sense on an individual level, but when *everyone* does it all that happens is that output drops.

[Brad Grenz]

See, it's that kind of stuff that makes a market economy so lame.

[Robert Sharp]

Interestingly, all the economy really needs is some optimism that it is getting better. If people become convinced that recession is over, then they will invest (and hire, etc.) and the recession actually will be over. Personally, I don't mind a few twistings of the truth if it accomplishes that. Apparently, people can't be taught how to avoid emotional investing, so I guess we will just have to learn how to manipulate it properly.

Recessions occur more by everyone simultaneously making the "right decision" to spend less money - because, you know, the economic outlook is uncertain, so it's best to hold off. Makes perfect sense on an individual level, but when *everyone* does it all that happens is that output drops.

But see, it ISN"T the right decision..it's the wrong one. It may SEEM right on an individual level, but that's the problem. People only think of themselves. In reality, it's the wrong move. That's probably what you meant by putting 'right decision' in quotes. As you point out, it's really only uncertainty that causes these trends...not reality. The people become victims of fear, and that fear creates a self-fulfilling prophecy.

[bmulligan]

Right again Sharp. Everything is based on faith. Faith in growth, faith in production, faith in the government's ability to payback loans and collect taxes next quarter. That's what heppens when your currency has no basis in reality, it relies on faith, just like RELIGION !!

[bmulligan]

See, it's that kind of stuff that makes a market economy so lame.

I sure hope this is sarcasm, 'cause if it isn't I've had 1 too many martinis to let this one pass...............

[Jason McCullough]

Interestingly, all the economy really needs is some optimism that it is getting better. If people become convinced that recession is over, then they will invest (and hire, etc.) and the recession actually will be over. Personally, I don't mind a few twistings of the truth if it accomplishes that. Apparently, people can't be taught how to avoid emotional investing, so I guess we will just have to learn how to manipulate it properly.

Recessions occur more by everyone simultaneously making the "right decision" to spend less money - because, you know, the economic outlook is uncertain, so it's best to hold off. Makes perfect sense on an individual level, but when *everyone* does it all that happens is that output drops.

But see, it ISN"T the right decision..it's the wrong one. It may SEEM right on an individual level, but that's the problem. People only think of themselves. In reality, it's the wrong move. That's probably what you meant by putting 'right decision' in quotes. As you point out, it's really only uncertainty that causes these trends...not reality. The people become victims of fear, and that fear creates a self-fulfilling prophecy.

This is getting metaphysical; is it a bad decision only if everyone else goes along with you? Maybe it's better to look at it in a prisoner's dilemna framework.

Something occurs that makes people worried about what other people are going to do economically (economic jitters, a boomtime collapses, war, whatever) - should you try to hold more money to deal with the economic risks, or hold the same amount? Here's your payoff matrix for making a decision:

If you don't try to hold more money and everyone else doesn't either, your income is unchanged.
If you don't try to hold more money and everyone else does, you lose a bunch of income (investing in a recession).
If you try to hold more money and everyone else doesn't, you lose a little bit of income (foregone investment in "normal" economic times).
If you try to hold more money and everyone else does, you lose a moderate amount of income (normal recession).

Looking at that, it's no wonder recessions occur; it's minimizes your risk (and possibly your statistical income loss; I'm not quite sure) to "defect" every time. There's a bunch of economic research that points out people really, really like to minimize risk, so holding more money is what they'll do. It's just a quirk of human nature.

[Skies]

Yeah. Right. The economic downturn ended November 2001. BULLSHIT!