Are we in a recession?
Half of Americans think so, at least according to the new CNN opinion poll. The poll helpfully described the recession as "marked by a significant decline in economic activity." But what the CNN article describing the poll doesn't tell is that our economy is nowhere near a recession.
The government uses the National Bureau of Economic Research to define when recessions begin and end. This nonprofit Cambridge organization defines a recession as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP (Gross Domestic Product), real income, employment, industrial production and wholesale-retail sales." Most economists consider a recession two or more consecutive quarters of negative economic growth.
So, are we in a recession?
In September 2007, the Bureau of Labor Statistics said 110,000 new jobs were created. For each of the last three months, our economy has created an average of 97,000 new jobs. Since August 2003, the economy has created more than 8.1 million new jobs in 49 consecutive months of job growth.
The national unemployment rate is at 4.7 percent -- low by historical standards.
Since President Bush took office, real after-tax per capita personal income has increased more than 12.5 percent -- an average of $3,750 per person. More than 30 percent of the country's net worth has been added since the president's 2003 tax cuts.
Real wages have increased 2.2 percent during the 12 months ending in August 2007. This is much higher than the average growth rate during the '90s, and translates into an extra $1,266 for a two wage-earner family.
Exports have increased over 14.8 percent during the 12 months ending in July 2007, and the trade deficit has been reduced by $8.3 billion.
Real GDP grew at a strong 3.8 percent annual rate in the second quarter of 2007. The U.S. economy is in its sixth year of sustained economic growth, averaging 2.7 percent a year since the turnaround in 2001.
This year tax revenues grew by $161 billion to reach $2,568 trillion, the highest level ever recorded, and an increase of 6.7 percent. And that follows the 14.5 percent and 11.8 percent increase in revenues during the two prior years.
The federal deficit declined by $250 billion in the last three years. In February, the budget deficit for 2007 was projected to be $244 billion. But by September, the deficit was just $163 billion, or 1.3 percent of the economy. As a percentage of the economy, the deficit is now lower than the average of the last 40 years.
What, then, accounts for the pessimism? Well, take a look at the mainstream media.