Where Are We with the US Recession Essay Example | Topics and Well Written Essays - 1250 words

Where Are We with the US Recession - Essay Example The whole of the viewpoints as presented in the article are based on the indications of two different definitions of recession. The first definition is based on the indication of contraction of real Gross Domestic Product (GDP) in two consecutive quarters. The second definition of a recession is in accordance with the system developed by National Bureau Economic Research (NBER) which is based on the contraction of employment, industrial production, real sales and real income in the economic cycles whose dates are as declared by the Bureau. Â  As analyzed by the authors, as per the first system, the recession in the United States had not begun till that date. The Gross Domestic product graph showed an upward trend in the first quarter of 2008, which accounted for 0.6 percent. This trend was in continuation with similar growth trends indicated in the last quarter of 2007. Though the article envisaged a downward trend by the end of the second quarter, this may be reversed in the third quarter as the consumption of the tax rebate cheques issued by the Bush government would take effect by this period. Â  In the second methodology the National Bureau Economic Research uses monthly indicators from the national accounts against the variables of employment, industrial production, real sales and real income to determine the actual dates of economic cycles and this system thus becomes more inclusive of minute details than in the case of the first methodology which only considers GDP trends whose frequency is quarterly. This allows the freedom to declare recession without the concurrent occurrence of GDP contraction, as happened in 1960 and 2001.The authors of the article also describe the non- predictive nature of this methodology as NBER declares a recession only after six months of the actual start of the recession.