The Newest Media Musical : "Recession!"

For the last 2 weeks, the media is talking about the US economy like it's Britney Spears. I'm thankful for the focus on something a bit more, um, relevant to our day-to-day lives, so lets talk Recession!

At first it freaked me out to get apocalyptic-sounding emails from my news sources about how the end was upon us in the form of a Recession because consumer credit is ridiculously high as always, and the S&P and the other stuff was losing big time points in single days as always in January. And then I spoke to my neighbor who felt that we were in a Recession because his favorite stocks were tanking.

At brunch on Sunday, I began to formulate a viewpoint on the Recession in the US. I've summarized in layman's terms below - and if you're an economist, please comment:

1. Q3 2007 GDP = 4.9 % (an astounding high)
2. There is speculation that we may be in the first quarter of a recession, meaning that GDP will have negative real economic growth as of Q4 2007, and then again as of Q1 2008.
3. Our last recession ended Q1 2003 (though some people dispute that you can call 2001-2003 a recession because it does not fit the classic def - though all the other econ indicators weakened drastically)
   
4. If indeed we find we are now in a recession, there have been 2 recessions under President George W. Bush.
5. To get out of the last recession, Greenspan wielded the big ol' monetary policy; concurrently we began to see strengthening economic indicators like consumer confidence, more housing starts, less than 5% unemployment, etc. Oh, and government spending went through the roof with the war, and foreign investment continued to rise.
   
6. The stock market picked up that summer and everyone who bought was happy for the next 4 years
7. The stock market went nuts on '06-'07 and everyone started making tons of money in oil, tech and steel - heck YEA!!!
   
8. Then the stock market went down after '07 holidays, and the credit card bills from the holidays arrived in the mailboxes and everyone got really sad
   
9. Recession!
10. I am suggesting that under President George W. Bush we have been experiencing one long stretch of extreme economic slowdown that has been punctuated by a big ol' spike of (temporary) upturn, felt by investors in 2006-2007.

We are measuring the state of the economy today against extreme highs we have felt over the last few years. GDP and the markets have experienced ridiculous high growth in those years - of course they will glow growth and approach a normal, average rate - happening now.

Update: There is another issue that adds to the fear factor coming over the wire - that of IPO's. Lots of IPOs to be postponed this year? Maybe. There are several fashion industry IPO's set for 2008: Tommy Hilfiger, Prada and Ferragamo. Hilfigers roadshow was set to start last week and was delayed at the last minute due to "volatile market conditions". Ferragamo's is still on for latter 2008, thought Ferragamo is not commenting on their IPO. Prada is working to "determine the best timing." What is interesting about this news (from WWD, Friday, January 25, 2008) is that Prada has postponed its IPO 3 times since 2001 due to "market volatility." Again - one long stretch of economic downturn and chaos under one President.

Update: Q4 2007 GDP has come in at .6% growth. Certainly much slower that expected - again, remember that both Q2/Q3 2007 came in at 4.9% - extreme high. We'll see what the Fed does. Haven't heard the R word in a couple days.