Uncle Miltie explains the relationship between inflation and recession:
What is a Recession?
- Donald R. McClarey
Donald R. McClarey
Cradle Catholic. Active in the pro-life movement since 1973. Father of three, one in Heaven, and happily married for 43 years. Small town lawyer and amateur historian. Former president of the board of directors of the local crisis pregnancy center for a decade.
Yesterday’s employment reports showed 528,000 new jobs [about two-times expectations] and unemployment lower at 3.5%. However, Zero Hedge [quoted at Instapundit] says there’s a 1.8 million jobs gap and says large numbers of people working two jobs skew the numbers. Also, labor participation is persistently low at 62% [fewer people are employed] casting doubt on employment data.
Also quoted at Instapundit.
“The debate has brought a new notoriety to the National Bureau of Economic Research’s Business Cycle Dating Committee, the organization that officially designates recessions. The NBER’s definition is “a significant decline in economic activity spread across the economy, lasting more than a few months” and taking into account gross domestic product, real income, employment, industrial production and consumer spending. That’s a mouthful, and it can’t compete with the simplicity of ‘two quarters of declining GDP.’ In any case, NBER won’t make a determination for months.
“Adding to the danger is that experts think that the expectation of inflation can cause inflation. Does the same psychology apply to recession?
“The administration’s communication challenge is twofold. First is the old “don’t think of an elephant” problem. What are you thinking of? Second, saying “This isn’t a recession” only convinces people we’re in a recession. The word “recession” makes a much stronger impression on the listener than the word “isn’t.” This is one of the easiest mistakes to avoid, but it pops up daily.”
I see aspects that militate against recession. One is the ocean of liquidity/cash in the economy. Banks hold $19.5 trillion in people’s deposits. And, Wall Street says there are $5 to $7 trillion in cash sitting on the sidelines.
However, we don’t need to call in the clowns, they’re running the White House.