Comments on: Recession protection http://blogs.reuters.com/great-debate/2011/08/08/recession-protection/ Thu, 21 Jul 2016 07:57:19 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: ptiffany http://blogs.reuters.com/great-debate/2011/08/08/recession-protection/#comment-35900 Mon, 08 Aug 2011 19:53:09 +0000 http://blogs.reuters.com/great-debate/?p=9840#comment-35900 If you talk with any bona fide economist who now or ever has modelled the US economy, they all use a breakeven point in the increase of GDP on the order of three to five percent. Recently, the Council of Economic Advisors set the figure @ 2.75% (with supporting justification).

There is also the artificial definition of a recession – two quarters of declining GDP. It could be one quarter, or two or three; it’s not some scientific definition. It should also be some period below the breakeven point, not zero, as we see in all the financial news. By the correct econometric definition, we are still in a recession. Also, since a recession that lasts more than two years is considered a depression.

When you factor in the deliberate under-reporting of the official unemployment rate, essentially ignoring long-term unemployed and classifying them as “no longer in the labor pool” and “no longer looking for work”, then anyone with a little common sense would conclude that we are definitely in a Depression. Don’t take my word for it. Ask Nobel Laurette Paul Krugman. Check with the United States Department of Labor’s Bureau of Labor Statistics. Both will tell you that real unemployment is grossly under-reported. 9% is a wildly optimistic rate that Congress and the Executive Branches love to repeat, knowing the real number is at least twice as high.

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