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Economic News, Data and Analysis

Economic Vocabulary

Robert Samuelson has a nice article in the Post that looks at the unsatisfying nature of the current “recovery.” Basically, because the recession was not that strong, the recovery seems to be weak as well.
He makes the important point that “boom” and “bust” give false precision to the economy which can fall somewhere in between.
We do have different terms for downturns to indicate strength: “depressions” are longer and deeper than “recessions.” And we also often refer to a “mild recession.”
However, there are no nifty terms to designate a strong economy from a weakly booming economy. The “recovery,” or the “boom” is more often than not thought of the absence of a recession. The NBER describes a boom as the normal state of affairs with recessions as shorter interruptions.
Perhaps we should distinguish between three types of growth periods. Here are my suggestions.
1. A “recovery” is the period after the end of a recession, lasting to the point at which the previous peak is reached.
2. An “expansion” is the period from the end of one recession to the beginning of the next recession.
2a. A “post-recovery expansion” is the period after the recovery, lasting to the beginning of a new recession.
3a. A “stagnation” is a period during an expansion during which the economy is growing, but is below a historic average.
3b. A “boom” is a period during an expansion where the growth rate is above historic norms.
I’m sure that there are better words for 2a, 3a, and 3b. Suggestions welcome…

‘Recovery’? Rhetoric vs. Reality (washingtonpost.com)
We are at a loss for words. If nothing else, this baffling economy has defeated the vocabulary of economics. We are supposed to be in a “recovery,” but it doesn’t feel like one.
–snip–
Our language seems increasingly disconnected from ordinary life. The standard phases of the business cycle suggest simple rhythms of pain and pleasure. Recessions are bad; recoveries are good. The boundaries are neat. But the reality is usually murkier. The boundaries aren’t so neat, and our labels often mislead.

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