July 30, 2004

STILL THE REAGAN RECOVERY:

US 2001 Slump May Not Have Been Recession at All (Tim Ahmann, 7/30/04, Reuters)

Not only was the U.S. recession in 2001 the shallowest on record, it may not have been one at all -- at least in the classic sense of two straight quarterly declines, new government data show.

In annual revisions to U.S. gross domestic product numbers released on Friday that could fuel a politically charged debate, the Commerce Department rewrote the history of the recent downturn by revising away a decline in the second quarter of 2001.

The new figures, which reflect more complete source data, show economic activity peaked in the second quarter of 2001, not the fourth quarter of 2000.

Measured from the new peak, the economy shrank just 0.4 percent, keeping the recession as measured by GDP the mildest on record. The 1969-1970 recessionary period, in which the economy contracted 0.6 percent, comes in a close second.

The National Bureau of Economic Research, the unofficial but accepted arbiter of U.S. recessions, has said the downturn began in March 2001 and ended in November of that year.

However, the White House has argued that the economy peaked earlier and has contended President Bush inherited the recession from his predecessor, President Bill Clinton.

Now, some might argue there was no recession at all.

"If I were describing this, I'd say it's essentially a flat period," said Brent Moulton, who is in charge of compiling the GDP data at the department's Bureau of Economic Analysis.


It takes many years to come up with these numbers and even then how reliable do we think they are? There's been speculation that when all is said and done economic historians will not consider the slowdown of the early '90s a recession either. That will mean that the recovery that began after the Reagan tax cuts, the Volcker tightening, and the PATCO firing will have lasted twenty something years and it shows no signs of ending anytime soon. Were a few realistic steps to be taken in President Bush's second term: a new global trade deal; privatization of Social Security, tax reform, further liberalization in the Middle East, and development in Africa, we could be in for several more decades of uninterrupted growth. This might eventually become a forty or fifty year boom--an achievement without precedent in human history.

Posted by Orrin Judd at July 30, 2004 2:34 PM
Comments

Flat and 9/11.

Even taking 9/11 into account that we were flat says something.

Posted by: Sandy P at July 30, 2004 6:10 PM
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