Monday, May 05, 2008

Evidence of Recession?

Warren Buffet claims the U.S. economy is in recession "as [he] defines it":
"The U.S. is in recession as I define it," Buffett said at a news conference. "I would define that as a situation where people are doing less well than they were three months, six months or eight months earlier and most businesses find themselves in that position too.
"If were are in a non-recession, I don't think people want to see it going in the same direction as it is and saying it's wonderful," Buffett added.

That second paragraph appears to have been butchered by the Reuters editor, but, I think it was intended to convey the idea that recession is the consensus opinion on the street.

I maintain that public opinion should not be used as evidence of recession. Why? Because, in man-on-the-street interviews, people tend to repeat what they hear on TV and read in the paper. And, both those outlets have lately been full of speculation about recession. So, better to stick with the technical definition of recession: Two consecutive quarters of negative growth for the GDP. After all, that is the objective gauge of what the man on the street really is thinking.

Tag:   Trackposted to Rosemary's Thoughts, Right Truth, Kodera's Korner, The Yankee Sailor, and DragonLady's World, thanks to Linkfest Haven Deluxe.

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