Economy Growing Despite ‘Recession’ Claims by Obama, McCain
September 3, 2008Data released by the federal government show that the GDP went up during the first two quarters of FY 2008 despite the fact that presidential candidates Barack Obama and John McCain said the United States is in a recession.
Experts from the U.S. government and the non-partisan National Bureau of Economic Research (NBER) told CNSNews.com it is unlikely that GDP would have gone up for two consecutive quarters if the economy had actually been in a recession.
But on July 12 in Chicago, Obama said: "I have little doubt that we've moved into recession at this point. The sooner we can get money into people's pockets, the sooner that we can stabilize the housing market, and the sooner that we can send a message to the markets that we're serious about creating an energy policy that will create greater energy efficiency over the next decade or so, I think the sooner we're going to get our fundamentals right."
At the Associated Press’ annual dinner on April 14, McCain was tepid in speaking of a recession, saying, “I would say that, oh, it’s very likely, and more and more economists are saying that we are probably, quote, ‘in a recession. … The main factor out there is that Americans are hurting right now. And they don’t care too much whether it’s a technically a recession or not.”
But according to data gathered by the government’s Bureau of Economic Analysis (BEA), the U.S.’s real GDP rose by 3.3 percent during the second quarter of FY 2008, which spanned from January 2008 to March 31. During the first quarter of 2008, which spanned from October to December 2007, the economy grew by 0.9 percent.
According to Andrew Hodge, head of profit research at BEA, a GDP growth above 3 percent generally indicates a healthy economy.
“I would say that it [the GDP] was stronger than expected, and it’s back up to its trend growth, which is somewhere around 3 percent,” Hodge told CNSNews.com. “And 0.9 percent growth is slow, but it is not recessionary.”
Hodge also said that though there are different ways to define recession, it is most commonly defined as two consecutive quarters of negative growth.
“We haven’t strung two negative GDP quarters together yet and, really, you need two of those to call it a recession,” said Hodge. “Around the world people generally define recession as two negative GDP quarters.”
Donna Zerwitz, director of public information at NBER – an organization that uses a combination of GDP, employment rates, industrial production rates, wholesale and retail rates, and other factors to define recession – told CNSNews.com that, so far, it is impossible to determine whether there was (or is) a recession but that GDP growth says it is unlikely.
“It’s possible that there was recession,” said Zerwitz. “But it’s unlikely.”
In late June, Reid accused Republicans of having driven the United States into recession.
"As the American people endure sleepless nights trying to figure out how to make ends meet and provide for their families, they deserve to know that their Congress is working hard to help,” said Reid in a June 26 speech he made before the Association of Latino Elected and Appointed Officials (NALEO) annual conference.
“Instead, they are seeing Senate Republican leaders simply refusing to work with Democrats on legislation essential to our country in this economic recession,” said Reid.
Pelosi said in a press conference on June 10 that the Iraq War had driven the U.S. into recession.
“[It’s] a war that has taken us into debt, into recession at the cost of our military readiness,” said Pelosi. “So whether it's our national security or our economic security, we do not need four more years of George Bush.”
President Bush has maintained that the economy has evaded recession.
“I don't think we're headed to recession," Bush told reporters at the White House on Feb. 28. "But no question, we're in a slowdown."