It has been said that economists have successfully predicted 8 of the last 2 recessions. Surely the mainstream media has an even worse record. Financial reporting in the American media is a tedious and unrelenting drizzle about the next recession allegedly lurking just around the corner. These articles are usually supported by a survey showing falling consumer sentiment, a smattering of data on whatever indicators in the economy are not completely bullish, and prognostications from economists who foresee an economic slowdown. Since it is unlikely that the economy will never have a recession, they will eventually be correct. Whether they are genuinely prescient is another matter. Even a broken clock is right twice a day. The interesting thing is that recession is constantly predicted in the face of consistent and pervasive economic growth. An economy is generally considered in recession if the gross domestic product (GDP) is declining. I created the graph below with data from the Economic History Services showing the annual GDP of the United States since 1980.
As you can see, recessions have been rare over the last quarter century relative to economic growth, with the gross domestic product of the United States more than doubling over that time period from just over 5 trillion USD to almost 12 trillion per annum. Yet the doom sayers persist unashamed.
0 comments:
Post a Comment