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September 08, 2008

So, no recession?

The latest numbers from the government show the pace of economic growth actually picking up in the second quarter of 2008. Does this mean we're not in a recession? Listen

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"Well, we don't know yet, and of course, it depends on how you define a recession. The old rule of thumb was that you had to have negative growth in the economy - that is, the economy actually shrinking, producing less goods and services - for six months or two consecutive quarters. Now, the latest numbers show that we actually had a slight negative growth rate in the fourth quarter of 2007, but thus far this year - for the first two quarters of this year - the growth rate has been positive. And actually the second quarter's growth rate was a fairly decent positive number. Now, many think that was helped by the stimulus checks, and of course, they're temporary. But this does leave us in a fairly unusual situation. I think most people - if you just polled people on the street - would say, 'Yeah, the economy's bad. We're definitely in a recession.' The statisticians - economic statisticians - would say, 'Well, wait a minute, we're not so sure.' But I think in some sense, this is simply a word game. We obviously have big issues now in the housing market, in the financial services market. We have had a somewhat modest rise in the unemployment rate. So I don't know that it really matters what you call it. We do have an economic slowdown. Again, it won't be for maybe six more months before we can know if we've had an official recession."

Posted by Dave at September 8, 2008 08:00 AM