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So Long to Declare a Recession

Why did it take so long to declare that America is in a recession?  If a recession is defined as two consecutive quarters of negative growth, then why did the government finally declare that we have been in a recession for 12 months?  I mean come on—did they think the public was that stupid?  You and  I knew it.  We knew it every time we went out to eat, every time we filled up our gas tank, every time we looked at out bank statements, and every time we heard about another close friend getting laid off.  Why did it take  the National Bureau of Economic Research so long to “officially” confirm it? My guess is they didn’t see it when more and more mortgages were going into default.  I guess they didn’t see if after more and more homes were going into foreclosure.  Did they see it   when the government set up $700 billion to bail out the banks?  Well actually we did hear about the recession in early December, so maybe the bailout triggered in the light bulb?

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Category: Banking, Credit, Government Bailout, Lending

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One Response

  1. [...] A recession is defined as a prolonged period of time when a country’s economy is slowing down.  Specifically it is 2 consecutive quarters where the GDP declines.  At the first sign of troubling times, anxiety is one of the first feelings that people experience.  This anxiety affects everyone, no matter how high or low a person’s income may be.  People who are financially comfortable observe their friends’ and co-workers’ modified spending and begin to mimic it, as job loss, combined with pessimistic headlines, validate their more cautious approach.  An economy is the result of millions of people’s actions.  As a result, this lack of action during a recession translates into less consumer spending. [...]

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