Is our economy in a recession or not? And does it matter if the material conditions of many Americans have worsened, especially this year?
The squabbling among economists — which is partly a result of the fact that different people use different definitions to define recessions — offers little comfort to the consumer trying to make ends meet.
Technically, a recession is a contraction in the business cycle. One definition says that GDP (gross domestic product) growth has to be negative two or more quarters in a row to declare a recession. But another definition says that when economic activity declines, or when indicators like unemployment, income, sales, construction, and production go down, we are in a recession. If the second definition is used, despite positive (but decreased) GDP growth, we are in a recession. And if things continue, we may be talking depression.
The economy is like an aging boxer taking body blows from an agile newcomer. There is rarely a headline that favors this economy: Construction is down, unemployment is up, inflation is up, GDP is growing at around 2 percent, there is a foreclosure crisis, a credit crisis, an energy crisis, food prices up by 5 percent this year and gasoline prices up by more than 20 percent. Does that sound like a recession or what? And if it doesn't, what should we call it? Economic hard times?
To be sure, there are a few consumers who are living their lives like they're golden. There are a few consumers who don't have to worry about the contractions in the business cycle because they are profiteering. There are Fortune 500 CEOs who will lose their job and get a seven or eight figure package to gild their exit. And then there are people who are being laid off and being told to go see if they qualify for unemployment.
Meanwhile, our economy is shedding jobs, generating fewer jobs every month this year. And hundreds of thousands of Americans, despite helping legislation, fear that they may lose their homes due to foreclosure. The conversation that economists should be having ought to be about how to get out of this mess, not what to call it.
Some legislators think the only way to go is to continue the Bush tax cuts, though those cuts have not done anything for anybody until now. Others would offer incentives and stimulus, but so broadly distributed that those who need the most help won't get it. Too many are shackled by the short run, and they need to dig in for the long haul. In other words, a stimulus package that includes K-12 school construction, subsidies for higher education, especially HBCUs (yes, I'm self-interested here), and a job training program for those inner city folks who are stuck at the periphery of the economy makes sense. Well-meaning legislators never quite get around to suggesting these kinds of stimulus measures because some believe that their colleagues won't support help to the most needy.
If we look at the poor, at inner city folk, at people of color, at immigrants, at the people who lack health insurance, housing assurance, food security, and employment possibilities, we find a group of people who are so much more distressed than the average American that it is frightening.
To be sure, this economy is kicking lots of folks to the curb, but there are some who have no curb, even, to be kicked to. Congress has recessed without paying special attention to the most impoverished among us.
And economists are debating recession.
While the news cycle seems obsessed with political trivia (who cares about Paris Hilton?), there are real stories that should be told about ways people are managing the economy.
What can we say about the renter whose bills are up thanks to an increase in energy prices? Or the laid off worker who has to hit pension funds to make ends meet? Few want to tell these stories because people are more interested in gossip than economic news. Especially when it's bad news. Recession, anyone?
Julianne Malveaux is an economist and president of Bennett College for Women.