TheGrey Lady says:

The
chairman of the Federal Reserve, Ben S. Bernanke, said on Monday that
he supported a second round of additional spending measures to help
stimulate the economy.

“With
the economy likely to be weak for several quarters, and with some risk
of a protracted slowdown, consideration of a fiscal package by Congress
at this juncture seems appropriate,” Mr. Bernanke told the House Budget Committee.

“Several quarters of weakness”… OR it could be “protracted”. Yikes! Several quarters seems protracted enough to me. Still, when Bernanke talks “protracted slowdown” you can be sure that we’re already well into a protracted slowdown. So, maybe the end is closer than we think.

Reuters:

Parts
of the United States, struggling with high jobless rates, seem to be in
recession, but the government’s plan to support credit markets will
help, President George W. Bush’s top economic adviser said on Sunday.

“We are seeing what anyone would characterize as a recession in some parts of the country,” Edward Lazear, chairman of the Council of Economic Advisors, told CNN.

This
tentative acknowledgement of a partial recession is actually a pretty
big step for the Bushies. Seven months ago, Monsieur Lazear waspredicting an autumnal rebound.

I really thought the Bushies would resist the “recession” word for the remainder of their term, and fall back on theole “A recession is defined as two consecutive quarters of negative GDP, and we haven’t had that yet… blah blah blah”.

Of course, that’s nottechnically true, but I thought they’d use it. Why let technicalities get in the way?

The National Bureau of Economic Researchuses
“four coincident indicators– industrial production, payroll
employment, inflation adjusted personal income less transfer payments,
and the volume of sales in the manufacturing and trade sectors adjusted
for price changes– to establish the dates of a recession.” The “two
consecutive quarters of negative GDP” thing is really just a rule of
thumb. (A rule that would not have applied to the early 2000s
recession, btw.)

The official recession designation often takes
months and years to happen. But, in my opinion, it’s pretty easy to see
and feel a “recession”, if you have any contact with the marketplace.
But it’s irritating when smart people in and around government delude
themselves (and us) for political reasons.

In particular, many
conservatives are prone to riding a couple of shopworn hobby horses
during a slowdown… especially when a Republican President is in
office. Here are a few of them :

1. “There’s no sign of recession here. Taxes haven’t been raised, and we haven’t had two negative quarters of GDP!” [A year ago, supply side maven Art Laffer made this exact argument on Larry Kudlow’s CNBC show.]

2.
“If the media wasn’t so gloomy, everything would be fine. The only
recession that’s possible is one that is caused by the media’s
persistent unhappy talk.”

3. “Ok, if we are in a recession, it’s somehow the Democrats’ fault.”

4. “We may be in recession, but electing more Dems will make it worse.”

5. “Historically speaking this recession is not that bad.” (For example, last month one ofMcCain’s economic advisors was trying to tell us
that the current widespread economic pessimism indicates that “we’re on the brink not of recession, but of accelerating
prosperity.” Just weeks ago, the advisor claimed thatwe’re “nowhere
close to being in a recession now”. Nowhere near! I mean, I sort of
agree with the advisors’ contrarian spirit about going against the
crowd, but he needs to take off the panglossian sunglasses first. The
first rule of recessionary holes is this: You have to realize that
you’rein a recession before you can claim that you’re already climbing out of one.) 

6. Then, well before it’s over: “We wouldn’t have had (such a bad) recession if we had [insert supply-side remedy here].”

===

“Economists
set themselves too easy, too useless a task if in tempestuous seasons
they can only tell us that when the storm is long past the ocean is
flat again.”

— John Maynard Keynes, Tract on Monetary Reform