I have an issue with the way the financial crisis is being labeled by the media and our government. We now know that this country's GDP dropped last quarter at a 0.3% annual rate. Thousands of jobs have been lost. Car sales have plummeted, as well as sales of other durable goods. Banks have folded; shops and restaurants have closed.
So why can't we call it what it is?
People should just start calling this "crisis" what it is: a recession. Yeah, I know, the GDP hasn't dropped over two quarters. But this still clearly deserves to be called a recession. In fact, some people are calling it something considerably worse: a depression. To quote Wikipedia:
A recession is a contraction phase of the business cycle, or "a period of reduced economic activity." The U.S. based National Bureau of Economic Research (NBER) defines a recession more broadly as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP growth, real personal income, employment (non-farm payrolls), industrial production, and wholesale-retail sales." A sustained recession may become a depression. Some business & investment glossaries add to the general definition a rule of thumb that recessions are often indicated by two consecutive quarters of negative growth (or contraction) of gross domestic product (GDP). Newspapers often quote this rule of thumb, however the measure fails to register several official (NBER defined) U.S. recessions.
At any rate, I'm now going to go back to what I'm sure everyone else is doing right now: watching presidential election results roll in.
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