If It Feels Like a Recession ...

A slumping housing market, sluggish retail sales, sagging consumer confidence suggest the economy could be heading into a recession. While it may already feel like a recession to millions of Americans, by the time we know for sure, the recession may already be over.

Copyright © 2008 NPR. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.

MELISSA BLOCK, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.

A slumping housing market, sluggish retail sales, sagging consumer confidence - these are among the many indications that the economy could be heading into a recession. While it may already feel like a recession to millions of Americans, NPR's Anthony Brooks reports that by the time we know for sure, the recession may already be over.

ANTHONY BROOKS: Recession is one of those words that seems to mean different things to different folks. People often use it the same way they say I have the flu or I'm depressed even if their conditions fall short of influenza or clinical depression. They just mean I don't fell so well. And that's what you hear in the streets these days when you throw around the R word.

Are we in a recession, do you think?

Mr. BOB GILLESPIE(ph) (Letter Carrier, Massachusetts): Yes.

BROOKS: Tell me why.

Mr. GIULESPIE: High gas prices, mortgage rates - I mean, the housing market, the price of food, everything. I think so. Everyone's feeling it.

BROOKS: This is Bob Gillespie, a letter carrier in Cambridge, Massachusetts, who was taking a coffee break in Harvard Square. He thinks we're already in a recession.

Mr. GIULESPIE: People are like edgy right now. You know, everyone's nervous about their jobs and day-to-day things.

BROOKS: Libby Mattingsly(ph) who works in a Harvard Square clothing store nearby also thinks we're in a recession based on how little her customers are spending.

Ms. LIBBY MATTINGSLY (Store Clerk): I've definitely heard millions of people come in and just sigh and complain about the fact that we don't have a sale and everyone seems to be really basically broke. Especially today on a rainy day, it's been maybe, like, one or two sales all day long.

Professor MIKE CONTARINO (Political Science, University of New Hampshire): I'm doing fine. But I think there are people around who aren't. And it's a real risk that we're going to be in a recession.

BROOKS: That's Mike Contarino, a political science professor from the University of New Hampshire who is grabbing a cup of coffee in Harvard Square. He doesn't think we're in a recession yet. Maybe that's because, as he says, he's doing fine.

What do you have to see, I mean, what puts us in a recession?

Prof. CONTARINO: Well, you know, they're saying that a recession is when your neighbor loses his job, and a depression is when you lose yours. I'm starting to see other people either losing their jobs or afraid they're going to lose them.

BROOKS: Luis Perez(ph) is seeing the same thing. He's a Spanish teaching assistant at Harvard who says his roommate is unemployed. But he's not sure if that means we're in a recession.

Mr. LUIS PEREZ (Teaching Assistant): I guess the general perception is that we're either there or heading there. I wish I knew the technical definition of a recession before I answered the question.

BROOKS: In fact, the technical definition of a recession is complicated. A lot more complicated than the popular one you might have heard - that a recession follows two consecutive quarters of negative economic growth. Gross domestic product is an important measure for economists who study and predict recessions. But they also consider a bunch of other numbers, including employment, inflation, sales, and income data.

Nariman Behravesh, chief economist at Global Insight, says based on all those measures, he thinks some of the folks in Harvard Square are right.

Mr. NARIMAN BEHRAVESH (Chief Economist, Global Insight): Well, we've come to the determination that in fact the U.S. is in a recession right now. We'll probably see one negative quarter in the first quarter this year. And another one in the second quarter before we come out in the third and fourth quarters thanks to lower interest rates and the fiscal stimulus package.

BROOKS: But Behravesh is making a forecast about what he thinks will happen. It's a prediction. What we know is that the economy slowed at the end of last year and barely grew at all. But we won't know if we're in a recession now until well after the fact.

Professor JEFFREY FRANKEL (Harvard Economist; Member, National Bureau of Economic Research): We typically don't declare a turning point until a year after it happens.

BROOKS: That's Jeffrey Frankel, a Harvard economist and member of the National Bureau of Economic Research, the NBER, the group that actually determines when a recession officially begins and ends.

The thing about the NBER is that it doesn't like to hurry. For example, the last recession began in March 2001, but the NBER didn't declare it until seven moths later, by which time it was over.

Prof. FRANKEL: And people often make fun of us about this. A headline once we do actually make the declaration is Harvard geniuses figure out what everybody else knew all along. But we don't mind that.

BROOKS: Frankel says that his job is to be definitive not first. So he can't say if we're in a recession yet. But Frankel does say he can't remember a time when there have been so many negative economic indicators. So whether or not this is a recession, it will feel like one to millions of Americans.

Anthony Brooks, NPR News, Boston.

Copyright © 2008 NPR. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to NPR. This transcript is provided for personal, noncommercial use only, pursuant to our Terms of Use. Any other use requires NPR's prior permission. Visit our permissions page for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.