On Intrade.com, the probability of a formal recession (two successive quarters of negative growth) in 2008 has fallen from the 70 percent range to the 30 percent range.
Some time ago I had proposed "the N word" economic indicator, namely that things would be really bad if lots of people were talking about the idea of nationalizing the banks. That hasn’t happened and indeed the people who predicted widespread solvency problems seem to have been wrong.
Paul Krugman has had numerous good posts on the Ted spread as an indicator of ongoing problems in financial markets. I’ll say this: during the Great Depression no one had to cite a spread to convince anyone that things were going very badly.
Economic knowledge is always subject to revision, but so far the evidence points in the direction of a mild recession, in the informal sense, and that The Great Moderation is still with us.
In a not altogether unrelated development, the second Harold and Kumar movie is excellent (if you like that kind of thing at all) and one of the most libertarian films I’ve seen, ever. It is extremely politically incorrect, however, which in part explains its mediocre reviews.
FWIW, I can remember that a few of us predicted here that the “sub-prime” crisis was more than that, and would echo out as far as … the example I and others used was “student loans.”
Well, from Business Week:
… our societies’ mad debt love has had consequences.
If you talk to people small midwestern towns you don’t need a spread to tell them things are going badly–and I mean this in terms of things going worse than they already were. I think Krugman’s citing spreads just to convince the people who are doing well enough for themselves that they can’t really tell there’s a recession…
small midwestern towns
Small midwestern towns have a long-standing reputation for economic hardship.
Thats good news about Harold and Kumar!
I think the ‘evidence’ being relied on isn’t as solid as some people think.
Here’s one reason I think we aren’t in a recession: Everyone thought we were in one.
When everyone was saying we were in a recession, that provides a lot of cover for people to go ahead and fudge their numbers to the loss side. We aren’t seeing across-the-bard losses.
Leading indicators are okay, and coincident indicators seem to indicate that what damage was to be done has been done. We have 0.6% growth in the first quarter, so if the recession is already over, then it never happened, by the standard definition.
However, now that people are starting to think the worst is over I’m starting to get worried.
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