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August 31, 2009

When a loss is a gain

The latest report on the broadest measure of the economy was greeted with much excitement and hope, yet it actually wasn't a positive report. So what, then, is all the hoopla about? Listen

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

"Well, this was the latest report on the aggregate production in the economy. Again, it's the broadest measure of our economy. And the initial estimate for the second quarter of this year was that that measure was down 1 percent. So it means the economy is still in recession. We're still declining. We're still receding. So then, why, you may ask, why are people excited? Well, because in the two previous quarters, that same measure was down 5 percent and 6 percent. So I think what analysts are looking at is the fact that, yes, the economy has still been in a state of decline, but the rate of decline is slowing. So that's giving optimism. Maybe in the third quarter and fourth quarter, rather than a decline, we may actually have an increase. And, indeed, that seems to be right now the standard forecast. Actually, the forecasts that most economists put out have become more encouraging. We're actually expecting an increase in production in the economy in both the third and the fourth quarters."

Posted by Dave at August 31, 2009 08:00 AM