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Are we in a recession? No one knows. Indeed, it's literally impossible to know. A recession is six consecutive months of negative economic growth. Atmost, December 2007 would be our first month, so we wouldn't know until sometime in June 2008 if, by the end of May 2008, we'd been in adecline for six straight months. So no matter what anyone tells you, wecan't know if we're in a recession yet. Mea Culpa The December retail sales figures were poor. Obviously, housing is weak. Autos look to be softening (good time to buy a Cadillac). Even most commodities are off their peak. More important than any of these to us economists, however, are two factors.First, because of repeatedly being stung by losses in real estate lending, lenders are reluctant to lend, which is causing a slowdown in economic activity. Second, money supply growth has been sluggish for the last several months. This is often a signal of a weakening economy. I want to be honest here (and everywhere): This slowdown is happeningfaster and harder than I thought it would. I was too optimistic. My optimism was based on a belief that the Federal Reserve would act more aggressively than it has in fighting the slowdown. It didn't, and we're paying the price. Let's hope that Ben Bernanke, the chair of the Federal Reserve Board,has learned his lesson. Hopefully, he'll now plunge in with both feet to get a lot of liquidity into the system, and reassure lenders thathe'll backstop them and not let them fail. He's now perceived as weak,and he'll have to act aggressively to get the ball rolling again. But he can do it. Retro Recessions For now, however, assume that he's doing too little too late, and thatwe'll have a recession. Here, then, are a few salient facts about postwar recessions, which I've discussed before. There have been10 recessions in the last 63 years. The average length of thesedownturns has been about 10 months. The average decline in economic activity from peak to trough was about 2.5 percent. No decline has beenworse than about 3.7 percent. In the past 25 years, there haveonly been 2 recessions, which is an extremely good record. The tworecessions -- in the early 1990s and the 2000-2001 correction -- havebeen extremely brief. The really severe recessions of the postwar era have been engineered by the Fed to fight inflation -- in the early 1970s and early '80s. When the Fed is fighting to promote expansion and not to rein it in, recessions tend to be brief. Real consumption doesn't fall for more than a few months in such cycles. It would be almost unheard of for there to be a year-on-year fall inretail sales from 2007-2008 if the Fed is actively liquefying the economy. Unemployment always rises in recessions. The degree ofthe rise is usually modest, generally only about 2 percentage points,although some -- like the one engineered by the Fed in the early Reagan years -- have gone as high as 4 points. The average length of involuntary unemployment during recessions is about six weeks. Slacker Overboard There is some good news in here. Even in a recession, more than 90 percent of workers who want to work willbe employed. Even in a recession, most businesses will make a profit.Even in a recession in this era, more than 10 million men and womenwill need cars and trucks. Many millions will need new homes. Tens ofmillions will need retirement investment products and life insurance. In the United States, even in a recession, there are plenty of people with money to spend. Those who tend to their work, who get to the office or showroom or shopearly, stay late, work hard, stay on the phones dialing for deals (asmy pal, Barron Thomas, puts it), will make money. Those who stay sharpand make a point of befriending their clients will make money. Yes,some extra effort will be needed, but it'll pay off. There's still money to be made, even when the economy itself has slowed down. It's the guy or gal who puts in extra effort who stays ahead and evenprospers when the economy is in a slowdown. The easygoing, laid-backtime-servers get tossed overboard. Stay Hungry (Not Literally) There's another key truth about recessions: They always end, and the economyalways goes on to a new plateau. It may take a while, but the stockmarket always moves on to a new high. So stay hungry. Work harder. Dig deeper. Keep investing in broad indexes. You'll come out all right on the other side. --------------------------- Ben Stein is a lawyer, economist, and commentator on finance (and a well-known actor and Hollywood personality). Stein served as an economist at the U.S. Department of Commerce. Hehas been a longtime contributor to Barron's and a columnist andeditorial writer for the Wall Street Journal. He has also writtenextensively about finance for New York magazine and the Washington Post. In addition to writing for Yahoo! Finance, he currently writes abiweekly column on economics and finance for the New York Times andappears weekly on the Fox News network commenting on finance andeconomics. He is the author of several personal finance books, including "Howto Ruin Your Financial Life," "Moneypower: How to Make Inflation MakeYou Rich," "Financial Passages," and -- with Phil DeMuth -- thebest-sellers "Yes, You Can Time the Market," "Yes, You Can Be aSuccessful Income Investor," and the forthcoming "Yes, You Can StillRetire Comfortably." Stein, whose father was well-known economist Herbert Stein, grew upin Silver Spring, Md. He graduated from Columbia University in New YorkCity in 1966 with honors in economics. He studied law and economics atYale from 1967 to 1970 and graduated from Yale Law School asvaledictorian in 1970. Stein is Honorary Chair of the National Retirement Planning Coalition, and lives in Los Angeles, Calif. [ 本帖最后由 audream 于 2008-1-22 11:24 编辑 ] |
