Keloland "Money Matters:" Economics Professor Interviewed About Recession
Thursday, December 4, 2008
Money Matters: Officially In A Recession
The word's been thrown around a lot lately, but this week the National Bureau of Economic Research officially declared that the country is in a recession and has been for a year.
It's a word that can send terror through Wall Street. But a Recession is no longer just two consecutive quarterly declines in gross domestic product. It's a slowdown of the entire economy.
Augustana Economics Professor Reynold Nesiba says, "It's not just looking at one number. It's looking at the employment, retail sales. It's looking at economic growth and they don't want to call it prematurely-- that can make it worse."
Even though we're now being told the recession began in December of 2007, Nesiba isn't surprised it took this long for all the data to come in.
"It does take six to nine months before you understand the economy has been in decline for some time."
We're told this current economic crisis is the worst since the Great Depression--but what's the difference between a recession and depression?
Nesiba says, “The Hoover administration in 30's coined the term, 'depression.' They thought it sounded milder than recession."
The Depression lasted 43 months, but economists are predicting this current recession should last roughly 16 months, ending by the spring.
"I am confident we have a better understanding of macroeconomics; how central banking works. And policy makers know we need to put stimulus and spending in economy. The most important problem right now is getting the economy restored and putting people back to work."
Nesiba says for the most part, South Dakota and Sioux Falls in particular are avoiding the national recession, because job growth continues here and housing prices have actually increased.