Labeling the current economic situation a “recession” has been premature, but common among the media, in recent months. But a new poll shows more and more economists are predicting recession will be averted.
An article by John Waggoner and Barbara Hansen in USA Today July 30 revealed the tide is turning against the notion of a recession, with economists split on whether the U.S. economy is currently in a recession.
“In the new survey, economists divide about evenly on the question of whether the U.S. is now in recession: 51% say yes; 49% say no. In the April survey, 67% thought the economy was in recession,” Waggoner and Hansen wrote.
According to the article, the economists aren’t predicting a scenario that meets the technical textbook definition of a recession – two consecutive quarters of negative gross domestic product (GDP).
“Gross domestic product growth will slow to a 0.2% annual rate in the fourth quarter, the economists say, but GDP won't turn negative in any three-month period through September 2009,” Waggoner and Hansen wrote. “The government is scheduled to issue its first reading of second-quarter GDP Thursday. Recession is a widespread downturn in economic activity lasting for several months.”
They also predicted a slowdown in inflation, a symptom of an ailing economy that stunts the growth of GDP.
“Most economists surveyed think inflation will abate in coming months. Consumer prices have risen 5.0% the 12 months ended in June,” Waggoner and Hansen wrote. “Economists expect prices to rise just 2.5% in the 12 months ending Sept. 30, 2009.”
The media have been predicting and diagnosing recession for months. They declared in January that a recession was inevitable. Some have gone so far as to compare current economic conditions to The Great Depression.
“[T]here are going to be a lot of questions they’re going to get from senators,” Velshi said, referring to Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke. “They’re going to be asked obviously about where we are in this recession, what can be done about it.”
Back in January, as the media were the echo chamber of economic doom and gloom, CNBC “Mad Money” host Jim Cramer chastised media colleagues for not being balanced in their recession reporting.