Driving home from work today, I was listening to "All Things Considered" on NPR. One of their topics in today's edition was the question whether America is in a recession or not. Recently I have heard and read a lot about America's economy crashing, due to the housing market and the mortage crisis, gasoline prices shyrocketing over the $100 per barrel mark and cost of food rising and rising.
Most of the people who were asked by NPR if they belive America is in a recession, answered yes or that they weren't sure how to answer this question because they are not sure how exaclty a recession is defined. It turns out that a recession is very hard to define and that most of the time a recession is declared after it is already over. For example, in 2001 we had the last recession. It took 7 months until economists from Harvard declared it as a recession. By this time the economy was already doing much better.
But are we really in a recession? Or is all the talk about it causing the recession? Could it be that the fear of a recession is stoping us from buying ends up driving us really into a recession? With the housing market still being a mess, the first loss in jobs in years and gasoline prices continuing to rise it is evident that if we're not in a recession already we are going into one without short cuts.
We will have to see if the lower interst rates and the stimulus plan can save our economy- and how fast...