Recession talk

Last fall, when I wrote that “there is a basket of indicators that suggest we may be in recession already,” I was probably too early in calling a recession, although I do believe that, when the final tally is scored, it will be shown that the US economy posted back-to-back quarters of ‘negative growth’ in the last quarter of last year and the first quarter of this year. The Bureau of Economic Analysis already has revised 2007Q4 down to –0.2 percent. The 0.9 percent currently given to first-quarter growth will surely come down over time as more fixed data are calculated. Given that the above quotation was lifted from a September 2007 essay, I wasn’t off terribly.

In the big scheme of things, it doesn’t much matter, I suppose, whether this is called a recession on not, as Rick Newman at SeekingAlpha.com explained in a piece posted this morning. I haven’t obsessed over the fact, one way or the other, because Mr. Newman is right when he asserts that “Nothing special happens the moment a recession is declared.” The difference between positive growth and negative growth is the minute fractions on either side of zero, and I hardly think economists and policy makers should fret over two-tenths a point. If something were imminently and awfully wrong with the US economy, we wouldn’t be having a pedantic discussion about the meaning of is.

Having said that, there may be other methods for divining the impact of economic hardship (or the expectation of it). The concept of declaring and noting a recession, again as Mr. Newman points out, is little more than “an academic matter” where “it’s very helpful to study business cycles once you actually know what happened.” I tend to agree as far as this goes, but I do think it is important that we gauge and monitor perceptions as well. Just as important as the data are people’s perceptions of the economy. On that score, perhaps the Google Trends website has as much to tell us the Bureau of Economic Analysis. The graphic below is the trend line for all searches with the term recession in them. Perhaps this graphic reveals much more quickly what we will learn in time as the data dribbles in.