Almost no one has reported on a surprising announcement from the Bureau of Economic Statistics yesterday. While analysts keep talking about a recession, the GDP actually increased in the first quarter of 2008. The modest increase — 1% — doesn’t indicate a great deal of economic strength, but it also shows that we have yet to see even one quarter of decline, let alone the two consecutive quarters of negative growth that has traditionally defined recession:
Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 1.0 percent in the first quarter of 2008 (that is, from the fourth quarter to the first quarter), according to final estimates released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 0.6 percent.
The GDP estimates released today are based on more complete source data than were available for the preliminary estimates issued last month. In the preliminary estimates, the increase in real GDP was 0.9 percent …
A 1% annual growth rate won’t excite many people. It follows a quarter with 0.6% growth, making it the weakest two-quarter period in the last four years, as the chart demonstrates. However, this is hardly the worst economy we’ve seen in memory. The 2000-2001 recession and the damage done to the economy after 9/11 was far worse than what we see now. In fact, the slight rebound may indicate that the worst of the slowdown is over and that we may start seeing a return to the stronger growth we have experienced since 2003.
Remember this when politicians and the media talk about “the worst economy since the Great Depression”. When the real numbers come out, no one bothers to report them. The hyperbole serves them better than the truth.