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The Final Word by Jim Thompson
I marvel at the continuing dialogue concerning the current “recession.” First off, a recession is not authoritatively defined until long after it is over. Secondly, from my personal experience, what we are in right now is nothing like the recessions of my adult life (December 1969 – November 1970), (November 1973 – March 1975), (January 1980 – July 1980), (July 1981 – November 1982), (July 1990 – March 1991, and (March 2001 – November 2001). The first five were officially contractions averaging 11.8% apiece, while the last two were both the same size: economic contractions of 8%. I suspect if we had a contraction of 16% (as two of the early recessions in this group were), most would think the world had come to an end.

Of course the conventional wisdom is a “recession” is when your neighbor is out of a job and a “depression” is when you are. Back in the 1980-1981 time frame, I personally knew scores that were out of work. In the current period, I have personally heard of one job loss. This, of course, means little except perhaps that I am hanging around with a more employable crowd these days.

The learning out of all this, however, is that one need be careful about accepting as accurate what one hears in the media. These days, there are so many media outlets vying for your attention that they all resort to sensationalism to attract you. Working in the media’s favor is that they present vignettes that have no basis in good, scientific statistics. It is like this: if you volunteer in a soup kitchen every day, you may decide the whole world is poor and destitute. And, indeed, the people you are around are poor and destitute and need help. This however, is no more an accurate picture of the whole economy than the one you would have if you lived in the Hamptons on the eastern end of Long Island, New York, and concluded everyone drives a Rolls Royce and stays at the beach all day. All of this leaves each of us with the responsibility to sort out, from many sources of data, an accurate picture of the entire economy, if we are interested in it. Vignettes mean nothing.

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