Deflating Double-Dip Perceptions
THE myth perpetrated on the American people over the last year can now be exposed.
There was no double-dip recession, and therefore, a triple-dip recession is not possible.
The double-dip recession you have read about, heard about, been told about, day after day never occurred.
Given an accurate assessment of the 25 most important economic indicators and their behavior since 1989, the public would see that the recent hesitancies in the economy in almost all instances never came close to representing a double-dip recession.
Unfortunately, once the cute concept of a double-dip recession caught hold, every isolated economic statistic was assessed as if it were reflecting such a concept.
For months, the weekly initial unemployment claims data, for example, have been reported as if they were terrible and confirmed a double-dip recession. The fact is that initial claims improved substantially from early 1991 through July 1991. They worsened a bit in August and improved only last month. A look at their behavior since July bears no resemblance at all to their recessionary behavior in 1990 and 1991.
The single most widely accepted economic measure of the United States economy, gross domestic product, reached a recession low in the first quarter of 1991 and has moved upward in every successive quarter since then. There has been no interruption, no dip.
How is it possible to entertain the idea of a double-dip recession under such circumstances?
What about employment, unemployment, production, and housing?
The unemployment rate worsened rapidly from mid-1990 through early 1991. Since then, it has worsened much more slowly. Its behavior hardly qualifies as a double-dip recession. There never was an improvement from which to experience a second dip.
Employment and production weakened for a brief three months between October 1991 and January 1992, and neither fell back to their early 1991 recession lows.
Their short-lived weakness bears no resemblance to their 1990-91 recession behavior.
Designating housing, in terms of permits or starts, as having experienced a double-dip recession is innaccurate.
Housing permits and starts have been rising steadily (subject to their erratic month-to-month behavior) since early 1991. Because of their tendency to precede overall growth, the idea that their recent strength is a positive sign is belated in the light of their improvement for over a year now.
The US economy still has challenging times ahead.
But prospects will not be enhanced by misconceptions. If the economy actually has grown when it is being disparaged by so many, it may do even better when the public realizes that the facts belie the media's version of events.