GDP vs. everything else

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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.

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