Guess what – the sky isn’t falling, it’s just coming to a “near” fall.
Over the past couple a months, the Associated Press has filed many reports about the prospects of recession and the effects that just the scare of a recession has had on various sectors. Well, on February 28 AP reported the economy has nearly “skidded” to a stop. [1]
“The economy skidded to a near halt in the final quarter of last year, clobbered by dual slumps in housing and credit that caused people and businesses to spend and invest more sparingly,” the story said. “The Commerce Department reported Thursday that the gross domestic product increased at a scant 0.6 percent pace in the October-to-December quarter.”
The technical definition of a recession is two consecutive quarters of negative economic growth. While 0.6 percent growth leaves a lot to be desired, it doesn’t mean the economy is retracting and that’s an important distinction, despite what some in the media say. Like CNBC’s Erin Burnett who told February 28 “Today” viewers the differences between slowdown and recession are “only semantics.” [2]
But earlier in the year, AP was also spreading recession fear. A January 14 story warned [3] that slower
“Consumer spending, which accounts for two-thirds of the nation's economic activity, had been showing resilience even as gas prices rose and the housing market fell,” the AP story said. “But recent data point to a sharper pullback, a trend that may tip the economy into recession.”
While AP called the 0.6 percent growth “a near halt” it was in line with Commerce Department forecasts (released in January) for the fourth quarter of 2007. Still, plenty of journalists have stoked “recession” [4] fears and some have even begun comparing the economic situation to the Great Depression [5].