Recession? Or Not?

When a Recession is not a Recession, but merely the possible beginnings of one

Last Spring I optimistically believed that, due to a few positive construction industry signs, the housing market would possibly rebound from its downward spiral. A short burst of activity, spurned on by the industry builders intentions to close their books on projects by the end of the year encouraged a slight, but short, increase in the sales of new homes in some areas around the country. The quick rise of hope, however, was short lived, and immediately afterward the numbers dropped lower than they had been in the months previously.

I never believed the short, but sweet, activity in construction and the real estate market would eventually become a new boom, or that the housing part of the overall economic picture would ever be what it was during the previous housing boom that came crashing down a few years ago. In fact, I am sure there is nobody that truly believes that we will ever reach that level of growth in the real estate market again. I did, however, hope that the activity I saw at that time could possibly be an indication that the bottom had been reached, and a new steady rise of consumer spending in the housing industry may stop the hemorrhaging.

Earlier this year I also indicated in a couple articles that I believe we are not in a recession, nor would we go into a recession should the government stay out of the way and allow the free market to adjust itself naturally as designed by our founding fathers. That is how Capitalism works. Ups and downs historically have created a roller coaster ride of statistics that, through the natural adjustments of the market, partly due to the habits of the consumer, would never allow the system to plunge into a deep depression as long as outside entities such as the government decide to refrain from manipulating the market in order to save us from such an economic catastrophe.

A number of liberals have been sending me messages and comments calling me an idiot and a liar because, as you have probably noticed, the economic downturn has been steadily worsening, and based on my articles of optimism, and the liberal subjectivity and misunderstanding of the written pieces, I obviously (to them) did not know what I was talking about. They have erroneously assumed that optimism considering a possible turn-around on the horizon must mean that I was somehow predicting a one hundred percent increase in the economy, and a return to the glory days of a robust economic engine.

Of course their attacks are an example of a very typical liberal attitude – always looking for that “Gotch’ya” moment.

I, like any other normal human being, understand that nothing is ever “for sure,” first of all. Secondly, if these smear merchants of the fringe left were to read what I wrote carefully, rather than with subjective intentions, they would have noticed I repeatedly indicated that we would be fine economically without government intrusion. Capitalism is a self-correcting system, with mild highs and lows that are exaggerated whenever artificial manipulation by government bodies are applied. In short, any government intrusion through bailouts or over-regulation, regardless of the wonderful intention to save us from economic disaster, is literally turning us headlong into economic woes that even Jimmy Carter couldn’t create.

Contrary to what the biased media and liberal Democrats are telling you, this is not the worse downturn since the Great Depression, and the Republicans are definitely not at full fault for the current financial difficulties this nation is facing.

However, if the government doesn’t step aside right now and get out of the way of the American Free Market, if the weakest links of the economic system are not allowed to fail and fade away or be engulfed by larger and stronger institutions in their corner of the industry, and if the consumer (and government) doesn’t stop living beyond their means while gladly accepting government welfare checks, we will be in for an economic disaster beyond imagining.

On the horizon are worse things than a housing downturn, credit crunch, and rising oil prices, should the current move towards more government involvement in the economy continue.

But are we currently in the worse economic pickle since the Great Depression, as the Democrats and Barack Obama proclaim, and ran their campaign on as they crammed unwarranted change down the throats of the unassuming voter?

Let’s take a look at the numbers and decide from there.

When it comes to economic statistics, most will tell you the true indicator of a recession is the Gross Domestic Product, or GDP. This number is the output of goods and services produced by labor and property located in the United States. And the Gross Domestic Product did indeed decrease in the third quarter of 2008. . . but this hardly makes for a recession. Aside from a meager 0.2 drop in the fourth quarter of 2007, the last time we have experienced a negative percentage change of the GDP was -1.4 during the third quarter of 2001 – a number nearly triple the -0.5 we experienced last quarter. Negative numbers also appeared during the first quarter of 2001 and the third quarter of 2000. Some may say that those were a residual effect from the Clinton years.

If you compare the third quarter of 2008’s drop of -0.5 of the GDP to the -3.0 of the last quarter of 1990, or the -2.0 of the first quarter of 1991, the current strain seems to be a minor hiccup. The numbers after the end of Jimmy Carter’s mismanagement of our economy are even more alarming (-7.8 1980 2nd QTR, -0.7 1980 3rd QTR, -3.1 1981 2nd QTR, -4.9 1981 4th QTR, -6.4 1982 1st QTR, -1.5 1982 3rd QTR). Judging by the GDP, this is hardly a recession, and hardly the worst economic downturn since the Great Depression. However, in order to convince the people that the Republicans were bad guys, and “Change” was the only thing that could save us, the Democrats had to paint the economy as gloomily as they could.

Some folks quote the unemployment numbers as being an indication of a recession, and that unemployment is spiraling out of control worse than any year since the Great Depression. The current 6.5 unemployment rate seems high if you compare it to the numbers over the last 10 years, even though the percentages remain within a point or two of each other all the way through that period. During the Great Depression unemployment rates topped over 20%, and in some years nearly reached 25%, well above the current 6.5%. In 1975 the unemployment rate was 9.0, in 1982 it reached over 10%. Once again, though the unemployment rate is higher than it has been in the last five years (and among the highest over the last ten years), it is hardly as high as it has been before, and hardly at a point that it will take major government influence to save us from disaster.

My point, I believe, is clear. The media and the liberal left created hysteria about the economy being the worst it has been since the Depression, and they did so soley for political reasons. It turns out that not only is this liberal information not true, if anything, our economy is only experiencing a minor bump in the road and has been essentially healthy over the last eight years of President George W. Bush. However, the bailouts, increases in taxes (business taxes, capital gains taxes, estate taxes, etc.) that Obama has suggested, and other government manipulation can (and will if put into place) send us into an economic direction that could prove to be exactly what the Democrats were swearing we were in the midst of already.

As Ronald Reagan proved after the recessionary years that followed the disastrous Jimmy Carter presidency, Fiscal Conservatism can not only change the direction of the economy, but lead us into years of prosperity. This is why it is so important that we begin now in planning to place Conservative Republicans (not moderates) into Congress in 2010 (as happened in 1992). The last time that happened, during the early 90’s, the budget was balanced and the country returned to a few years of economic prosperity. However, if we do not inject fiscal conservatism back into the government, and get liberal government out of the way of Capitalism and the Free Market, then what we are seeing now will continue to worsen, until finally we will wind up in a full blown recession with the Democratic Leadership fumbling around searching for excuses and opportunities to blame someone other than themselves.
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Published in: on December 1, 2008 at 2:16 am  Leave a Comment  
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