John Irons's Blog


Economic News, Data and Analysis

The Phantom Recession

Despite all the
recession talk recently, the economy apparently isn’t doing so badly. The
Commerce department today (4.27) announced that GDP
grew at a 2.0% annual rate in the first quarter. This was up from 1% in
the final quarter of 2000.

The 2% rate is
still slower than this time last year, but it seems as though a recession
has been avoided for another quarter. (A recession is often defined by
2 or more quarters of negative growth, click
for more on the definition of a recession). This means that the
current expansion has lasted for an even ten years – the trough of the
recession in the early 1990’s came in March of 1991.

Caution: Revisions

The number that
was released is the “advance GDP report” and is subject to revision. In
the last two quarter of 2000, the final release was slightly lower than
the advance number – so it’s possible – but very unlikely – that we will
be dipping below the zero mark. 

On average preliminary
real GDP is revised by 0.6 points to reach the final measure – in 90 percent
of the cases the revision (advance to final) was between – 0.9 to 1.3.
(See table)


Revisions to
Real GDP
Average  2/3 of revisions 90% of revisions
Advance to preliminary 0.5 -0.5 to 0.7 -0.9 to 1.2
Advance to
0.6 -0.6 to 0.9 -0.9 to 1.3
Preliminary to
0.3 -0.4 to 0.4 -0.5 to 0.6
Advance to
1.4 -1.1 to 2.0 -1.6 to 3.4
Preliminary to
1.4 -1.2 to 2.0 -1.7 to 3.1
Final to latest  1.4 -1.1 to 2.3 -1.8 to 3.0
1978- current)

Despite all the
warning signs, negative talk, falling consumer confidence and a weak market,
it seems that our economy is not as fragile as feared. The 2% increase
should be taken as good news.

We should be

A decade of
uninterrupted growth!
This is the longest expansion on record – a full
10 years with no recession. Perhaps I’m just an optimist economists, but
I plan on boycotting the negative news for the weekend and having a bottle
of Champagne to celebrate. 



Graph: White
House Briefing Room

Filed under: Recession