jackiedoherty.org

Have you heard this one?

A recession is when a neighbor loses his job; a depression is when you lose yours.”

Ha, ha. Very funny. Last night at a meeting I heard that we are now “officially in a recession.” I know they call Economics a (dismal) science, but it seems more subjective than that. Some economists are saying that the recession actually started in December 2007; a quick google will give you stories about the recession from last January, March and April. Two consecutive quarters of declining GDP is the standard definition of a recession, but that doesn’t take into account (rising) unemployment rates and (falling) consumer confidence. And lest you feel that at least a recession is better than a depression, know that a depression is simply a really bad recession, and we probably won’t know we’re in it until we’re out of it.

I don’t know about you, but my my head is spinning between inflation, stagflation and now the dreaded deflation. (Deflation means prices are falling, but apparently that’s NOT good news, as witness yesterday’s plummet in stock prices). After years of being chided as big spenders and bad savers, it is now apparently the scared-to-spend consumer who is undermining the economy. How to make sense of all this, or should we even try? As the NYT blog, Econimix, explains, the spector of Japan’s “lost decade” (the 1990s) looms:

A banking crisis led to a tight credit market, which was dragging down the economy. In response, the Bank of Japan lowered interest rates to zero. Still, banks refused to lend. “Prices for pretty much everything declined, following a bust in the real estate and stock markets…” wrote Bill Powell in a recent article for Time magazine. “The country entered a decade of stagnation.”

Now, that’s depressing.