Let’s Not Mince Words While the Global Economy Heads South
There’s a distressing geographic breadth to the slowdown. We shouldn’t obsess about what to call it.
Prices are soaring.
Photographer: Christopher Dilts/BloombergBen Bernanke wasn’t the biggest fan of labels. In 2008, the Federal Reserve chair urged Congress not to get hung up on the definition of recession. What mattered most was the financial pain and economic trouble — and working out how it came about and what to do about it.
His advice was stirring, given Bernanke’s former membership of the academic panel that declares the rise and fall of US expansions. It’s also relevant in understanding today’s travails. Much time has been spent on whether the American economy meets the practical definition of the R-word, or whether technicalities matter most. Do two consecutive quarters of decline in gross domestic product warrant the description, as is the case in many countries? We can always wait for the official call from the National Bureau of Economic Research, on whose business cycle dating committee Bernanke once sat. But the secretive group typically takes about a year to declare the onset of a slump and is dismissive of the two-quarter GDP metric.