More Humpty Dumpty Issues
Recently, I noted the confusions caused by the fact that two very different groups of people, 'newspaper economists' and 'academic economists' both go by the same name of 'economists'
Today, let's talk about another word that causes confusion due to being used to mean different things by different people: 'recovery', or more precisely, 'the recovery'.
You'll often see people, in particular economists, suggest in the newspapers (or wherever) that they expect 'the recovery' to begin at a certain point in time. The tricky part is that by 'the recovery' they mean the point at which GDP growth (shrinkage) has bottomed out and begins to improve again. But for the average person, recovery does not really happen until the job market improves.
For example, in the recession of the early 1990's, GDP growth bottomed out in either 1990 or 1991. But the job market was still terrible in 1994 and only really began to improve through 1995 and 1996.
I was planning to write more about this gap in nomenclature / expectations, but Jim Stanford over at Relentlessly Progressive Economics beat me to the punch by a few days, so I'll direct you over to his well worth reading post instead of going on further.
Just something to keep in mind when you read something about 'recovery' in the newspapers - it may not mean what you think it does.
Today, let's talk about another word that causes confusion due to being used to mean different things by different people: 'recovery', or more precisely, 'the recovery'.
You'll often see people, in particular economists, suggest in the newspapers (or wherever) that they expect 'the recovery' to begin at a certain point in time. The tricky part is that by 'the recovery' they mean the point at which GDP growth (shrinkage) has bottomed out and begins to improve again. But for the average person, recovery does not really happen until the job market improves.
For example, in the recession of the early 1990's, GDP growth bottomed out in either 1990 or 1991. But the job market was still terrible in 1994 and only really began to improve through 1995 and 1996.
I was planning to write more about this gap in nomenclature / expectations, but Jim Stanford over at Relentlessly Progressive Economics beat me to the punch by a few days, so I'll direct you over to his well worth reading post instead of going on further.
Just something to keep in mind when you read something about 'recovery' in the newspapers - it may not mean what you think it does.
Labels: humpty dumpty was right, recovery
posted by Declan at
Thursday, January 15, 2009
2 Comments:
That's already the current practice. If you look at the US employment data and compare them to the NBER reference cycle, the peaks and troughs line up almost exactly.
We don't have an equivalent of the NBER panel, but the Bank of Canada (and I, for that matter) didn't call the recession until employment fell off in November.
By
Stephen Gordon, at 5:23 AM
Well, I was trying to give them the benefit of the doubt, since it seems possible that GDP growth will bottom out in 2009 but not possible that any kind of 'recovery' as understood by the man on the street will be underway by end of '09.
So I took it as a miscommunication, but perhaps you are right and all the economists in the newspaper are simply crazy, not misunderstood.
By
Declan, at 10:00 PM
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