Stop saying “recession”

This is a plea to anyone who currently holds a position in news broadcasting. You could be a news anchor, a writer, or even a person likely to be interviewed on economic issues. I am begging you, please, please stop saying the word “recession.” After everyone involved has taken five minutes out of their lives to carefully consider the meaning of the word, you may resume using it, on the sole condition that you do so correctly.

So, to be clear, let me take a moment to share the correct definition here. In the United States, the Bureau of Economic Analysis is responsible for tracking and officially measuring and reporting on the gross domestic product (GDP). This Bureau, one of a number of them under the auspices of the Commerce Department, defines the term as follows:

“A recession is a decline in a country’s gross domestic product, or negative real economic growth, for two or more successive quarters of a year”

Now then. Now that we all are working with the definition, as defined by the organization empowered by law in this country to handle these matters and widely accepted by macro economists, let us consider for a moment how this term might apply to an issue near and dear to my heart and likely to yours: the current status of the United States economy.

The reason I bring up the issue in the first place is that I listen to a combination of NPR news programs during my drive to and from work each day. There has been a lot of talk in the news recently about the economy. Between the sub-prime housing fiasco, high energy costs, and rapidly fluctuating markets the world over driven by uncertainty about the direction of the US economy, there has been plenty to talk about. What drives me up the wall, however, is the frequency with which smart people who should know better use the word “recession” to describe the current state of the economy. I am constantly bombarded with the word for the length of my commute.

The problem, of course, is that in the first quarter of fiscal year 2008, which due to a variety of complex historical factors ran from October 1st to December 31st of last year, the gross domestic product of the United States actually increased. Real economic growth, by any of a wide range of measures, was positive for the last three months of the fiscal year. Certainly some sectors of the economy took a beating, and have continued to do so in the first month of the second quarter of fiscal year 2008 (which began January 1st), but overall the economy actually expanded.

For this reason, we are not currently in a recession. In fact, by definition, we cannot describe the economy as being in recession for at least another six months. Using the term in the way that many people have been is irresponsible, because it says something about the economy that simply isn’t true.

Now, I don’t mean to suggest that there is no reason to be concerned about the US economy, or its potential impact on the larger world economy. There are certainly a number of factors which suggest that we are in for a bumpy ride. I don’t want to detract from the very real need for people to understand what is going on with the economy. I strongly believe that the media has a tremendous obligation to carefully examine these issues.

Especially in an election year, the economy matters to all of us, and there are important choices being made right now on behalf of you and I as to what might be done to correct some of the discouraging signs we’re seeing. The ongoing debate about the details of the economic stimulus package that both the white house and the Congress are working to put into place is vitally important.

I wouldn’t dream of asking anyone to stop having these important conversations. All I’m asking is that when you talk about the economy, especially if you are talking about it through the considerable amplification of a national media outlet, that you take a little bit of care with the words you choose. The R-word has special meaning, and you would do yourself and everyone else a favor to be careful in how you apply it.

-posted by Mark

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16 Responses to Stop saying “recession”

  1. Mike says:

    The last quarter of 2007 is the first quarter of fiscal year 2008? You’re shitting me! Whose fiscal year? The federal government’s? Well, I’ll be damned.

    Fortunately, the BEA seems to take the sensible route and just refer to it as “the fourth quarter of 2007.”

    By the way, I don’t have that much of a problem with raising the possibility of “recession” at the moment. Since we don’t have any figures from the current quarter, and since there are more layoffs announced each day, and since just about every arrow in sight has spent the last couple months pointing down, it seems safe to guess that the current quarter will come out negative. So we might well be in what will one day emerge as the next recession. That much should be presented as fact, right?

  2. seaswell says:

    in other news, however, I’ve taken up the word in my daily life, for times when I feel sad, but not so sad that i would consider the feeling depression. as in, “i’m just feeling a little recessed today.”

    i’ll stop if it really bothers you, though.

  3. TheGnat says:

    I have to agree that the economy is taking a nosedive, but we can’t call it a recession *now*, only that it might or will be a recession. My personal meter is my father’s work, which is infrequent in good economic times, and crazy busy and profitable right before and during a recession. And he is craaaaaaaazy busy.

  4. Dana says:

    I dunno, Mike, I think Mark’s complaint does have some legitimacy, in that so many commentators want to imply that we are in a recession right now, or possibly will be tomorrow. At most, we are in the very beginning of the first quarter of a period that may end up, in another two months, having overall negative growth. At the beginning of the next quarter, then people can start panicking about its end truly heralding a recession. Which is sort of what you’re saying at the end of your comment, except that isn’t how things are being presented as fact on the news.

    seaswell, I think that is a fine use of the word. We’ll see if Mark agrees. You should try to start a viral adoption of your definition and see if it sticks.

  5. Jan says:

    On my end of the globe, noone is talking recession yet, but everybody is looking at “US consumer data”, “Federal Bank decisions”, “federal interest rate adjustments”, et cetera. When I hear that so and so many thousand people will lose their house because the whole deal bounced, and that’s only in the US (I hear the UK is gonna be hit bad as well), I don’t know. It may not be a recession according to the nicely phrased definition, but it’s serious. And it doesn’t help the dollar (the symbol of US economy) to become stronger, that’s for sure.

  6. kidsilkhaze says:

    I’m with you Mark! I actually heard some talking head on the radio say “well, the recession might be short, it might only be for a quarter.” If I had caught where we worked, I would have called his boss to scream.

    There are more serious economic problems than a recession, and that’s what we’re dealing with, so let’s… deal with them instead of pretending that we’re in the middle of an R word and can deal with that instead.

  7. Mark says:

    Mike,

    The US federal government starts its fiscal year at the beginning of October the year before it is numbered. It used to do it at the start of July the year before, but Congress moved it back by a full three months back in 1974 in order to give themselves more time to pass a budget. Other countries do similar things, though it varies from one to the next when the national government starts their fiscal year.

    In the United States, businesses may select their own fiscal years however they like. They decide on the first day of the fiscal year when they first set up their tax status, and then operate on whatever calender they’ve selected for themselves. I understand it is possible, but hugely difficult, to change it once it’s been selected, though.

    I don’t have any objection to people talking about economic difficulties. I don’t even have any problem with people talking about the possibility that six months from now we will officially be in a recession, if they have some kind of compelling argument to back that up (and there are certainly some to be had). I just object to using the term to describe right now, because that is completely inaccurate.

    Seaswell,

    I have no particular objection to you using the term in that sense. I might, however, find myself inclined to suggest that you only be allowed to do so in cases when you’ve been feeling mildly sad for two consecutive units of time. The human psyche being what it is, a fiscal quarter is likely too long, but perhaps two days in a row would be enough. Then again, outside of economics, the word has less specific meaning, and you should likely feel free to apply it as you see fit. You get points for a clever turn of phrase , either way.

    Jan,

    I agree that troubles in the US economy are much farther-reaching than just within the United States. Particularly with the sub-prime market, these things affect lots of other countries. Because those loans were packaged up and resold to so many different financial institutions, banks all over the world are seeing the damage to their bottom line.

    Kidsilkhaze,

    Thank you. I certainly do think that there are some very real issues to be dealt with in the here-and-now. Throwing around scary words, for no particular reason other than their ability to generate a knee-jerk reaction in your audience, helps no one to make rational choices.

  8. Mark says:

    On a more positive note, I did hear the host of All Things Considered carefully define the word and clarify with his guest whether it described the current state of the economy. Both avowed that it did not.

  9. Roy Huggins says:

    Woo! The dollar is weak against the yen! Woo!

  10. Jan says:

    Quote from a business person (as seen on the stockmarket pages of my bank’s website): “Insgesamt legen die Daten nahe, dass die US-Konjunktur zwar lahmt, aber dass das Ausrufen einer Rezession derzeit nicht angebracht ist”, kommentierte eine Volkswirtin.”
    (Altogether, the data show that the US economy may be limping, but that calling it ‘recession’ is absolutely wrong.)
    Did you talk to that person first, Mark? šŸ˜‰

  11. Mark says:

    Well, Jan, I have to say that my German is more than a little bit rusty, but I’ll take credit for showing him the light if you’re so eager to give it to me. I’m just glad to hear people taking a rational approach to the issue.

  12. Jan says:

    Achtung Baby! It was a woman (thus the female ending, “VolkswirtIN”), but I’m glad it makes you glad. šŸ™‚

  13. […] The problem is this term is as hotly debated, and has seems to be misused almost as much as “recession,” and when you see it in the media it seems typically to mean that an activist judge is one […]

  14. What? you are gripe about the word recession? Did you not just read your own writing? Why do you not post the GDP for 2 quarters of last year.

    Next time, gripe about the use of “sub prime meltdown” and the like. Such use instantly biases people in one direction without presenting the whole truth. You are an idiot for using the term “sub-prime housing fiasco”. First a house is not sub-prime. Second, the “fiasco” was the bust of a bubble fueled by a long time tradition of greedy dishonest fictitious realtors and lenders to capitalize on trumpeted up values to gain on percent sold. War, enormous loss of US jobs state and nation wide, prime at 35%, and sub-prime at 65%, these combined has popped the bubble.

  15. And not just the US either fool.

  16. Dana says:

    Dear Anothercoilgun,

    1) Please note that this post was written in January 2008, and you are commenting nearly 6 months later. You must take context into account for time-sensitive news-related posts, even if the internet does save everything.

    2) Note that this post is not about the economic bubble bursting or not bursting. It is about the definition of the word “recession.” A large part of your comment appears to be ranting for personal reasons and has very little to do with the topic of this post.

    3) Also note that the term “sub-prime” appears on this entire page before your comment exactly once, in the form of the term “sub-prime market.” In fact, it was within this comment:

    I agree that troubles in the US economy are much farther-reaching than just within the United States. Particularly with the sub-prime market, these things affect lots of other countries. Because those loans were packaged up and resold to so many different financial institutions, banks all over the world are seeing the damage to their bottom line.

    Nowhere does this indicate a misuse of the term, even by your definitions.

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