GDP vs. everything else

So it is a recession, or isn’t it? Personally I’m starting to find the whole discussion extremely tiring. But it has political implications, and this morning’s employment report seems to help answer the question, so here goes:

Yeah, we seem to be in a recession. Although it’s still a lot milder than I and a lot of other people would have expected given how messed up the financial world is.

What has kept the recession call debatable so far this year has been the refusal of the gross domestic product numbers compiled by the Commerce Department to go along. GDP is up, while most every other economic indicator of significance is down. Now I’m a big fan of GDP and all, but the very fact that it tries to represent the entirety of economic activity makes GDP perhaps the least reliable real-time economic indicator. There are just too many estimates and fudges involved to get it right at first.

So if the GDP report (3.3% real growth in the second quarter) and the employment report (payrolls down for the eighth month in a row in August, unemployment up to 6.1%) seem to disagree, believe the employment report.

Update: If you’re curious what actually makes a recession qualify as a recession, as commenter True Conservative is, read this post.

Apple CEO Cook Gives Up $75M in Stock Dividends

NEW YORK — Apple CEO Tim Cook is giving up $75 million in dividends on restricted stock that the company is awarding to all of its employees.

In a filing with the Securities and Exchange Commission on Thursday, Apple Inc. said that Cook requested that his restricted stock units not receive dividends. The dividends that Apple workers are getting amount to $2.65 per quarter for each restricted stock unit held. The shares are not normally eligible to receive dividends, so Apple’s decision is a perk for its employees.

True Conservative

Yes, the “recession” argument is rather like listening to lit crit types argue about genres.

But question:

I’ve researched quite a bit, and posted this query on a couple of econoblogs: is there an actual formula of some type that NBER uses? Or is it just a bunch of worthy sages standing at the taffrail holding up their collective thumb and squinting at the wake?
Justin Fox

The latter.
True Conservative

Thanks. That’s what I thought.

No wonder you’re finding the discussion tiring.

Like genres: is Troilus and Cressida a tragedy or a comedy? Or “history, pastoral, pastoral-comical, historical-pastoral, tragical-historical, tragical-comical-historical-pastoral”?

Steve
http://trueconservative.typepad.com
CTS

The GDP number is affected by imports. The huge run-up in oil price (large imports) effectively INCREASES GDP in the current quarter. Later, as these increase in inputs are factored into the economy they show up in the inflation numbers and get factored out of the statistic on growth of the economy.

See Barry Ritholz’s the Big Picture for more.
CTS

BH has an estimate that without the oil price distortion the economy grew at .1% in the quarter.

Brad Delong has a pretty good post up about when the economy peaked (Dec 2007, says he).

We’ll see when the NBER names the recession as starting when they come in after the election.