Hype
Media, let's make it look worse than it is.
Despite the media's best efforts this year to create panic, the economy moved through the first quarter, growing at just a 0.6 percent pace as housing and credit problems forced people and businesses to buckle down.
Just to get things straight, here is the definition of recession.
Recession:
A significant decline in activity spread across the economy, lasting longer than a few months. It is visible in industrial production, employment, real income and wholesale-retail trade. The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country's gross domestic product (GDP).
The other day I heard President Bush referred to the economy as being in a rut. I think the official word is growth recession.
Growth Recession:
An expression coined by economists to describe an economy that is growing at such a slow pace that more jobs are being lost than are being added. The lack of job creation makes it feel as if the economy is in a recession, even though the economy is still advancing.
Many economists believe that between 2002 and 2003, the United States' economy was in a growth recession. In fact, at several points over the past 25 years the U.S. economy is said to have experienced a growth recession. That is, in spite of gains in real GDP, job growth was either non-existent or was being destroyed at a faster rate than new jobs were being added.
The Federal Reserve cut its key interest rate by a quarter percentage point Wednesday, but the central bank's statement signaled it may be the last rate cut for at least a while. So, if you are considering buying or refinancing, now is the time.
Labels: economy, interest rates, recession
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Posted By: Joe on Thursday, May 01, 2008
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