CNN's 'Recession Watch' Continues, with New Definition of Recession
It is a rare edition of CNN’s “Your $$$$$” that does not hint at or mention recession.
The November 17 edition featured a graphic titled “RECESSION WATCH” with a quote from guest Britt Beemer, chairman of America’s Research Group: “If the consumer doesn’t shop at Christmas time it would signal to Wall Street that we are in a recession.”
“We really have the perfect retail storm right now,” Beemer said. “Never in the history of retailing have we seen higher food, higher fuel [costs] and we got 27 percent of consumers complain that their property taxes of home ownership have gone up.” He was interviewed on a downbeat segment, “Holiday Shopping, Will Consumers Spend?”
CNN’s Christine Romans asked whether consumers would pull back from Christmas shopping or would be “enticed” by sales. The report insinuated that the entire U.S. economy would depend on the season’s consumer sales. The Business & Media Institute has reported that economists disagree on the importance of holiday spending.
But Beemer went further on “Your $$$$$.” He provided a new definition of “recession” based solely on Christmas shopping. A recession is typically defined as two consecutive quarters of negative GDP growth.
Another more subjective measure used by the National Bureau of Economic Research (NBER) states that “a recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.”
Of this list, the NBER tells us that “employment is probably the single most reliable indicator” of a recession.
The U.S. unemployment rate remains steady at 4.7 percent, the envy of the world. The unemployment rate of, say, France is at 8.2 percent – nearly double the U.S. rate – and its GDP is growing at only 1.8 percent.
Real GDP grew at a strong 3.9 percent in the third quarter of 2007
October 2007 marked the 50th consecutive month of job growth.
The economy has six years of uninterrupted growth.
Real after-tax per capita personal income has risen by 12.7 percent, an average of $3,800 over the last seven years.
“The trend is your friend” is the economists’ cliché, and the above trends indicate that a sound economy will continue. Beemer would rather cite a temporary weather condition than more than four years of job growth.
Even for the sake of argument, using holiday sales for a new definition of “recession,” Beemer’s observation remains to be seen. Retail giant Wal-Mart is predicting a strong holiday season and fourth quarter.