The Newly Declaired Recession

A recession is defined as a period of general economic decline, defined usually as a contraction in the GDP for six months (two consecutive quarters) or longer. Marked by high unemployment, stagnant wages, and fall in retail sales, a recession generally does not last longer than one year and is much milder than a depression. Although recessions are considered a normal part of a capitalist economy, there is no unanimity of economists on its causes. The government has now recently declaired that America is now having an issue with a recession. The last time taht America was in a recession was in the last two quarters of 2001 where the current value of the GDP went down but, because of an estimated decrease in the price level, the real value of the GDP increased 0.2 of 1% from the third to the fourth quarters.

While this cast doubt on whether a recession occurred in last part of the year 2001, but evidence will show that some economic trouble developed in the middle of 2000. This can be seen from the chart for private domestic investment, which is below.

According to the private, nonprofit, nonpartisan organization called the National Bureau of Economic Research or the NBER, determined economic recessions, the U.S. economy was in recession from March 2001 to November 2001 over a period of eight months. Economic conditions did not work up to the short definition of the word recession, which is "a fall of a country's real gross domestic product in two or more successive quarters." This has led to issues about the procedure for figuring out the starting and ending dates of a recession.

The NBER's Business Cycle Dating Committee or BCDC will use monthly, instead of quarterly, indicators to determine the ups and downs in business activity. It can be seen by pointing ouT that starting and ending dates are given by month and year, not quarters. Although there is controversy over the exact dates of the recession, which led to the characterization of the recession as the "Clinton Recession" by Republicans, if it could be traced to the final term of President Bill Clinton. A move in the recession date in a 2004 report by the council of economic advisors to several months before the one given by the NBER was seen as politically motivated. BCDC members say tha tthey would be open to bring up the dates of the recession as newer and more definitive data to become available. In 2004, NBER President Martin Feldstein stated: "It is clear that the revised data have made our original March date for the start of the recession much too late. We are still waiting for additional monthly data before making a final judgment. Until we have the additional data, we cannot make a decision."

Despite this as of 2008, no further revision to the dates has been made. By using the stock market as an unofficial benchmark, a recession would have begun in March 2000 when the NASDQ rashed following the collapse of thE Dot-com bubble. The Dow Jones Industrial Average was relatively unaffected by the NASDAQ's crash until the September 11, 2001 attacks, after which the DJIA suffered its worst one-day point loss and biggest one-week losses in history up to that point. The market rebounded, only to crash once more in the final two quarters of 2002. In the final three quarters of 2003, the market finally came back permanently now agreeing with the unemployment statistics that a recession defined in this way would determine to have existed in a span from 2001 through 2003. Really financial issues work back and forth and it is very hard to understand how money works. In the past recessions, like the Great Depression involved rebuilding the banking system entirely. The past recession fortunately is merely a financial cycle that has an uphill slope when the financial system is well and it goes down once it reaches a high and then back again. The recession we have has been working its way up but has not been a sudden one so it might fix itself on its own, hopefullt by 2010.

President-elect Barack Obama has declaired a plan to cut taxes on the poor and middle classs while raising the wealthy. He also should take a look at what FDR had done by following the guild lines of the New Deal in order to be successful. An employing program must be installed, for those who have been recently laid off. Houses need to be provided for those who have no place to live and the car companies need to be bailed out or else many jobs will be lost so that must be avoided.

http://www.businessdictionary.com/definition/recession.html
http://www.applet-magic.com/rec2001.htm

http://www.nber.org/cycles/recessions.html
http://www.businessweek.com/magazine/content/04_08/b3871044.htm
http://www.washingtonpost.com/ac2/wp-dyn/A38826-2004Jan22?language=printer