Hope and Fail

Economics advisers: ‘Recession is over,’ but ‘of course’ it isn’t

Two of President Obama’s top advisers on economics appeared on Sunday shows this week, and they gave separate assessments of whether the recession is over.

First up, on ABC’s “This Week,” Larry Summers, the director of the White House National Economic Council, said the recession is over:

George, here is what I know. We were talking about depression, we were talking about the financial system collapsing. Today, everybody agrees that the recession is over, and the question is what the pace of the expansion is going to be.

OK. Everybody agrees it’s over. Well, not quite.

Christina Romer, chairwoman of the Council of Economics Advisers, is using a different definition. On “Meet the Press” host David Gregory asked, “So in your mind, this recession is not over?” To which she said:

Of course not. We have–you know, for, for the people on Main Street and throughout this country, they are still suffering. The unemployment rate is still 10 percent. That’s what–that’s why the president was talking this week.

So which is it?

To be fair, defining a recession isn’t exactly precise. Webster’s says it’s a “period of economic decline when production, employment and earnings fall below normal levels.” That definition would go with Romer’s explanation.

However, most economists define a recession as a decline in the nation’s gross domestic product for two consecutive quarters or more. According to the Bureau of Economic Analysis, GDP began to grow during the third quarter of this year. So Summers would be right.

The problem, however, is that Summers and Romer are at the top of President Obama’s economics team. If they can’t at least define the problem amongst themselves, how are they going to solve it?