“Recession is here, economist declares.”
Both the headline and the first graph of lead story on page 1 of today's Boston Globe (motto: owned by moguls, written by interns”) describe the recession identified by Martin Feldstein as “the most serious since World War II.” It doesn't attribute the phrase to Feldstein (or to anyone else) and this is fairly important. Because as far as I know there was no recession during World War II. I thought that the economy expanded throughout the War. My information shows a brief, mild recession in 1945 as the U.S. rapidly demobilized, and another brief downturn in 1949. But the longest recession after WWII was, I think, the 1953-54 one that helped elect Eisenhower. What is with this WWII benchmark?
Please share widely!
I suppose one can read “worst recession since World War II” to mean either
I believe the second was intended — for the reasons you cite.
WWII was, economically speaking, two things: one, a time of huge economic expansion, and two, the time of economic expansion that ended twelve years of the Great Depression.
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p>It also the beginning of the modern, regulated, economy.
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p>So, worst, since WWII is another way of saying, the worst of the New Deal era, or the worst since the Great Depression, or a time when one out of every four people who wanted to work were unemployed.
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p>That is pretty dire news, if true. Also, pretty bad news for whomever assumes the White House in 2009, as it suggests that we could be looking at a single termer.
In 1953, Eisenhower had already been elected. I thought it was Truman’s Korean Police Action and Adlai Stevenson’s lousy campaigning that won it for Ike.
It was Dwight D. Eisenhower, for goodness sakes.
I mean if the broader economy slumps hard it will hit the Bay State in some fashion, even though Mass jobs numbers grew in January while the nation slumped.
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p>I wonder whether because our state economy has been slower than the nation’s for a few years, and our housing prices have not slipped as much and have been relatively flat for a few years (we were also never as dependent on construction and home building as many parts of the nation due to our restrictive zoning) if we can weather this storm better than other areas? Will it hit the fiscal situation for the state as well? The last short recession was a fiscal disaster of which we have yet to entirely recover, given our persistent structural deficits.
We had a 3billion hole to plug then and had to raise taxes in 2001, over Jane Swift’s veto. Could it be that bad now? If so, tax hikes would seem unavoidable because there are very few areas to cut now after the cuts of the Swift and Romney eras.
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p>I just hope Governor Patrick and his team are starting to engage with Murray and Di Masi and some real good economists to think about options and how they can engage the public in grappling with the tough choices that lie ahead.
primarily by the twin deficits that we have had over the past 7 years. While we talk about the federal deficit of a couple hundred billion, that is after the Social Security surplus has been confiscated, otherwise the reported deficit would be much more. And the trade deficit went over $700B for at least the past 2 years. That is far too much of our national income.
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p>For another look at the probable cause of the Great Depression, read the following and see what elements of that time have existed these days under the Bush Administration.
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p>http://www.geocities.com/Capit…
I happened to go shopping today at a mall in Leominster. I saw NO sign of a recession. The line at the registers at Target and Dick’s Sporting Goods tells me the vast majority is working and spending!!
I think you may have misread the story. The first sentence actually did attribute the statement to Martin Feldstein:
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p>”The United States has already slipped into a deep recession that could be the most serious since World War II, said Martin Feldstein, president of the Cambridge group that is considered the official word on economic cycles.”
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p>Both Bloomberg and Reuters gave similar accounts of Feldstein’s statement:
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p>”Harvard University economist Martin Feldstein, a member of the group that dates business cycles in the U.S., said the nation has entered a recession that could be the worst since World War II.” — Bloomberg
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p>”Answering questions from the audience, Feldstein said the downturn could be the worst in the United States since World War Two.” — Reuters
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p>Regardless, I think CentralMassDad is correct. Feldstein meant this downturn could turn out to be the worst of the post-war (or modern) U.S. economy.
are feared to be possibly the worst in a long time, until proven otherwise. There is always something of concern when the economy softens, and without hindsight, it is hard to discount the possibilities.
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p>This one does seem to hold a fair potential for problems, though. We succeeded in nationalizing a housing bubble, bought with $700 Billion a year of foreign loans. At the same time, the federal government borrowed its way into a hole during the period which should have retired the public national debt, before deferred obligations. The nation has been addicted to asset inflation without wage inflation and with minimal consumer price inflation; lenders got away with lousy underwriting standards because of the expected certainty that asset prices would keep going up.
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p>The federal reserve is in the bizarre position of having nobody that wants to prevent inflation. Normally, lenders want to preserve the value of the dollar. In this case, many big lenders need to preserve the value of the assets backing their loans; loans made with leveraged, easy money.
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p>The dollar slide shows that the foreigners that were willing to loan us the money to buy their stuff with aren’t willing to do that under the same terms forever. But even that has stayed near record territory – albeit with devalued dollars. Economies worldwide are addicted to US deficit spending.
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p>On the bright side, maybe some long-standing imbalances will be corrected. But for a while, we won’t know where the bottom is.
Your actions are so loud, I can’t hear you speaking. February income tax collections in Massachusetts are up over the previous year’s February on the strength of income tax, and up 5.7 over the prior Y-T-D figures.
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p>No question there’s a recession in some states: Florida, Arizona, California. And, no question that the 2007 growth has slowed in Massachustts, but no sign yet of a recession.
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p>There are a ton of financial institutions in MA that largely derive their income as a percentage of assets held. If their asset base drops 10%, ergo their percentage based income drops 10%.
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p>We may very well do better than other areas of the country, but the ongoing (and unfolding) credit crisis is a national problem. Considering that this is all falling apart pretty quickly, not sure I’d read too much into the income tax receipts (remember, the markets didn’t start tanking until November 2007 – up to that point it was happy days are here again in the financial markets).
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p>Hey for that matter, be careful of taking things at face value anyways. Back in the day, MA saw a huge spike in capital gains receipts in 2006 and using static projections, assumed this going forward. Now if someone had just thought a little bit and realized that this was a one-time event due to the imposition of higher tax rates in 1987 due to TRA ’86, would have had a better understanding of future receipts and would have planned accordingly.
Doh, meant capital gains receipts in 1986, not 2006.