Published on: March 14, 2008The Wall Street Journal reports that a majority of economists surveyed by the paper now believe that the United States has “slid into recession,” an opinion shift that appears to have resulted from a US Department of Commerce report “that retail sales tumbled 0.6% in February; sales excluding volatile auto and parts decreased 0.2%.
“The decline reflected a sharp slowdown in consumer spending, the primary driver of U.S. economic growth, as Americans grapple with high gasoline prices and the credit crunch, as well as drops in home values and other asset prices.”
The nation also lost 63,000 jobs in February, the second consecutive monthly decline.
The economists conceded that they have reached this conclusion despite the fact that the nation has not endured two consecutive quarters of declines in the gross domestic product; according to the paper, the National Bureau of Economic Research doesn’t necessarily follow that definition.
Bringing the recession story home, Marketing Daily reports that “while rising fuel prices may get more headlines, the U.S. Department of Agriculture's Economic Research Service says the Consumer Price Index for all foods (both at home and in restaurants) jumped 4% between 2006 and 2007, the highest annual increase since 1990. And it forecasts an additional rise of 3 to 4% this year.”
- KC's View:
- While there have been a number of people – both in the government and business - talking about the nation being in recession, the argument against that position has been that until the nation goes through those two consecutive quarters of declines, it was just unwarranted pessimism.
So imagine my surprise to find out that the National Bureau of Economic Research doesn’t even accept that definition.
And, to reiterate something that we’ve been harping on lately, the broader question is whether this is ultimately a recession or an economic transformation that will have longer-lasting impact. That was the argument advanced by IRI’s Thom Blishock last week in a conference session I moderated, and it makes a lot of sense to me.