Recession definition or are we in a depression?

James Garrett, January 23, 2010

The recession definition is a period of general economic decline. Typically defined as a decline in GDP or the gross domestic product, which is the total number of dollars spent in the US economy. When this total dollar amount declines for two or more consecutive quarters it is considered a recession as defined by the Federal Reserve. The recession definition is typically accompanied by a drop in the stock market, an increase in unemployment, and a decline in the housing market. The recession definition is generally considered less severe than a depression, and if a recession continues long enough it is often then classified as a depression. There is no one obvious cause of a recession, although overall blame generally falls on the federal leadership, often either the President himself, the head of the Federal Reserve, or the entire administration.

Based on the characteristics of the current financial crisis, the U.S. is in a depression, not a recession. What is the difference between a recession and a depression?” A depression is characterized by “falling asset prices, a credit crunch and deflation. All are factors that we see unfolding in the current crisis our present in the current economy. A depression is the result of a bursting asset and credit bubble, a contraction in credit, and a decline in the general price level. This is where we are right now. As this does not fit the recession definition it does fit the definition of an economic depression. By definition we are in a depression not a recession.

We currently have falling housing prices in most areas of the country. High unemployment which started in December 2007 or 25 months straight of accumulating job looses as of December 2009. The banks are not lending money at a rate great enough for economic expansion thus we have a credit crunch. This does not fit the recession definition but it does fit the definition of an economic depression

Currently the Federal Government is providing spending in large enough amounts to artificially make it look like the economy is expanding. The third quarter revised economic growth rate was 2.3 %. This was all due to additional Government spending to stimulate the economy by the federal government and it is not from the private sector economy expanding. If we take away the huge amounts of money the federal government is pumping into the economy we have a negative growth rate not a positive. I want to clear up the fact that what the government spends is figured into the Gross domestic product numbers calculated by the Federal Reserve. Government spending is not separated from the private sector economy.

Economic growth rate expansion by additional government spending does nothing to grow the private sector economy. It just creates a larger budget deficit and expands government deficit spending and cannot be sustained without higher taxes or additional continued deficit spending. This will eventually result in currency devaluation otherwise known as inflation. This is another form of taxing your money.

A recession cycle normally lasts an average of 18 months. This recession has already lasted longer than 18 months. If you look at how long job contraction has been going on for now more the 24 months and the real estate prices have been declining for more the 3 years now. The banks started having large mortgage loan defaults in early 2007. It is now January 2010 and there’s no end in sight for the home mortgage defaults as large numbers of prime mortgage loans are being added to the sub-prime problem, due to the high unemployment rates. This problem is projected to persist into early 2012. This also does not fit the recession definition it does fit the definition of an economic depression. What will become of the US economy between 2010 an 2012?

There are no recession proof jobs in an economy as bad and deep as this one has been. Normally a government job is said to be in the category of recession proof jobs. Some states have been cutting hourly work weeks or even firing government employees to make their budgets. This will only get worse as the state governments cannot print money like the federal government can. This also does not fit the recession definition, it does fit the definition of an economic depression.

In the Great Depression average prices in America fell by one-quarter, and nominal GDP ended up shrinking by almost half. I predict a much different outcome in this depression due to the huge trillion dollar federal budget deficits projected for 2010 and 2011

In the book 2012 what’s really going to happen. You will find out.

How it all started.

Specifically who is doing it to the American people? I’ll give you their names.

I will tell you why the elections in 2010 will do no good in changing the direction we are headed in.

Why it’s being done intentionally by the very government that is supposed to protect us.

How our current political system has everything to do with all the current problems.

How the so called stimulus package passed in February 2009 will do nothing to help the economy.

A month by month prediction of the economic decline that will destroy our currency and our government.

What 2013 will look like after the government has collapsed.

How this condition will last between 7 years and could go on for 20 years, until 2033.

What the 2013 aftermath will look like.

The chapters of 2012 are as follows

1. How I know

2. How we really got were we are

3. General summary of the current economic conditions

4. The Federal deficit problem.

5. Oboma promised no new taxes.

6. Liberalism or communism.

7. To stimulate or not to stimulate.

8. 2010 to 2013 the final chapter.

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