CNN's 'Recession Watch' Continues, with New Definition of Recession
It is a rare edition of CNNâ€™s â€śYour $$$$$â€ť that does not hint at or mention recession.
The November 17 edition featured a graphic titled â€śRECESSION WATCHâ€ť with a quote from guest Britt Beemer, chairman of Americaâ€™s Research Group: â€śIf the consumer doesnâ€™t shop at Christmas time it would signal to Wall Street that we are in a recession.â€ť
â€śWe really have the perfect retail storm right now,â€ť Beemer said. â€śNever in the history of retailing have we seen higher food, higher fuel [costs] and we got 27 percent of consumers complain that their property taxes of home ownership have gone up.â€ť He was interviewed on a downbeat segment, â€śHoliday Shopping, Will Consumers Spend?â€ť
CNNâ€™s Christine Romans asked whether consumers would pull back from Christmas shopping or would be â€śenticedâ€ť by sales. The report insinuated that the entire U.S. economy would depend on the seasonâ€™s consumer sales. The Business & Media Institute has reported that economists disagree on the importance of holiday spending.
But Beemer went further on â€śYour $$$$$.â€ť He provided a new definition of â€śrecessionâ€ť based solely on Christmas shopping. A recession is typically defined as two consecutive quarters of negative GDP growth.
Another more subjective measure used by the National Bureau of Economic Research (NBER) states that â€śa recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.â€ť
Of this list, the NBER tells us that â€śemployment is probably the single most reliable indicatorâ€ť of a recession.
The U.S. unemployment rate remains steady at 4.7 percent, the envy of the world. The unemployment rate of, say, France is at 8.2 percent â€“ nearly double the U.S. rate â€“ and its GDP is growing at only 1.8 percent.
Real GDP grew at a strong 3.9 percent in the third quarter of 2007
October 2007 marked the 50th consecutive month of job growth.
The economy has six years of uninterrupted growth.
Real after-tax per capita personal income has risen by 12.7 percent, an average of $3,800 over the last seven years.
â€śThe trend is your friendâ€ť is the economistsâ€™ clichĂ©, and the above trends indicate that a sound economy will continue. Beemer would rather cite a temporary weather condition than more than four years of job growth.
Even for the sake of argument, using holiday sales for a new definition of â€śrecession,â€ť Beemerâ€™s observation remains to be seen. Retail giant Wal-Mart is predicting a strong holiday season and fourth quarter.