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Are we already in a recession?

Published: Monday, Oct. 1 2012 11:12 a.m. MDT

Sept. 2011, Jose Guillen, sorts recyclable items at a recycling center in Los Angeles. The ranks of the nation's poor have swelled to a record 46.2 million Americans. High numbers in unemployment could put Americans back in another recession. (Jae C. Hong, Associated Press) Sept. 2011, Jose Guillen, sorts recyclable items at a recycling center in Los Angeles. The ranks of the nation's poor have swelled to a record 46.2 million Americans. High numbers in unemployment could put Americans back in another recession. (Jae C. Hong, Associated Press)

Our take: Despite the housing market seeing success, other areas that have a hold on the nations economy are seeing numbers dropping. Christopher Matthews, from Time explains why we could be dropping back into another recession, if we haven't already:

"What's in a name? Would a recession by any other name be as painful? That's the debate that raged a few years ago as economists and commentators debated whether we were officially in a recession or not. As economist Paul Krugman argued in 2007: 'The official definition of recession has become delinked from peoples' actual experience. Right now, we're in an economy with deteriorating employment and incomes, collapsing home prices, and business retrenchment. Is it also an economy in recession? Who cares?'

Broadly speaking this is true. Most of the time and for most people, the difference between no growth and contraction probably doesn't mean that much. However, we are in a much different situation now than we were in 2007. The Federal Reserve has more or less gone all in with its open-ended quantitative easing. The government's fiscal mechanism is paralyzed and a large portion of the electorate has no appetite for further fiscal stimulus. If the American economy were to go into a so-called 'double-dip' recession the government would be especially hard-pressed to drag us out. It would be a huge blow to the nation's confidence and would lead to shrinking government revenues and further net job loss in both the public and private sectors."

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