Last Friday or Saturday, my mother asked me qua economist whether we were in a recession.
I carefully explained to her that the standard formal definition of
recession is two or more consecutive quarters of over-all economic contraction. So, as I explained, if I said that we were in a recession then I would be saying that it had contracted in the first quarter of 2008 and would contract in the second quarter, or that it would contract both in the second quarter and in the third quarter.
After that careful prefacing, I told her that I thought that we were in a recession, but that this had to be seen as a guess.
Well, the data have since been reported for the first quarter of 2007, and apparently the economy did not contract, though its annualized growth rate was a sad .6%. My guess is in danger of being falsified, if the growth rate manages to stay at-or-above zero in the present quarter, or if things pull back above zero in the next quarter. Unsurprisingly, I'd be pleased if the data proved me wrong.
In that first quarter, there were those who were mocked for refusing to concede that the economy was in recession. The data demonstrate that it was wrong to mock them. Not that any apologies will be made by those who did the mocking, or even that they will be held to task by other commentators in their circles.
Mind you that a small decline wouldn't have legitimized the mocking. What is wrong, first and foremost, is too much certitude. And then that wrong is compounded by attacking those who are duly cautious.