As of July 2008, we continue to hear tortured pronouncements, typically without much factual information, about how the US is in "recession", and has been for several months. The vast majority of such recession mongers conveniently neglect to tell us that they are more interested in their own political agenda than fair evaluation of the facts on the ground. They are trying to score political points by falsely proclaiming (often with barely contained glee)that economic conditions are similar to past recessions, such as 1991 and 1981. Far too many Americans buy into these exaggerated claims, either because they do not remember previous recessions or they are easily "persuaded" by the constant pessimism pervading much of the media during this very political year.
Final first quarter (Q1) real GDP results have recently been increased to 1.0 percent, which is an increase from the prior quarter. There has never been a recession in the US where real GDP is both positive and increasing. The fact remains that the US economy is clearly not in recession, using any reasonable interpretation of the traditional definition.
For any debate on this issue to be fair, there must be basic agreement on the meaning of the word recession. However, considering arguments on the other side, it is quite clear that the vast majority of those who claim the US is now (and has been) in recession are twisting the traditional definition.
Some proponents of the "yes we are" in recession argument have in fact enunciated their intention to change the traditional definition of recession. However, they fail to also discuss how, using their personal definition, the US would have had many more "recessions" since 1945 compared to the identified recessions widely accepted by economists representing the two main political parties (and even some fringe parties).
The basic traditional definition (though there are variants to be considered) of recession is a contraction in "real" ("inflation" adjusted) production, generally accompanied by large-scale increase in unemployment.
A generally agreed upon condition of the basic definition is that production is fairly defined by the US government measurement of Gross Domestic Product (GDP).
Final fourth quarter (Q4) 2007 real GDP came in at 0.6 percent. While much lower than average values for the past 40 years, this value still represents "real" growth, not contraction.
Final first quarter (Q1) 2008 real GDP has been reported as 1.0 percent also; again, growth, not contraction.
It is of interest to note that Q1 2008 actual GDP (not adjusted for so-called "inflation") was 3.2 percent. Actual (not adjusted) values of GDP are rarely (if ever) reported by the primary media outlets. When you review actual GDP values, along with the breakdowns of component values, you can see that low GDP values are very often the result of high "inflation" values, not lower values of actual production. This result highlights the importance of understanding what is really being measured by so-called "inflation", which is for another article.
Real GDP for Q1 2007 was also 0.6 percent. Yet, Q2 and Q3 real GDP values were well above average, showing that short-term trends do not necessarily continue in the same direction.
Current unemployment, at 5.5 percent (per US government figures) remains far below unemployment levels that occurred as a result of prior recessions.
During the 1970s and even into the 1980s, the vast majority of mainstream economists considered 5-percent unemployment to define "full" employment for the US economy. Unemployment reached 9.7 percent in 1982 and 7.5 percent in 1992, both during or just after actual recessions.
From 1980 to 1996, there were only two years (1989 and 1996) when average annual unemployment was less than 5.5 percent. Anyone claiming that 5.5 percent unemployment should be considered evidence of "recession" is obviously not trying to base their "argument" on a reasonable interpretation of reality.
Eventually, another recession will occur. However, the US most certainly is not in recession now, no matter how political spin-meisters manipulate the data.