UCLA: No recession coming

News item from the L.A. Times: "Brushing aside conventional wisdom, UCLA economists say California and the nation will survive the housing slump and job losses without plunging into recession -- although it will still be miserable for many Americans."

More: "'We are holding firm: no recession this time,'" UCLA Anderson Forecast Director Edward Leamer said in a report being released today.

For what it's worth, UCLA predicts that GDP will dip by 0.4% in the second quarter, but that GDP will show marginal growth in the first quarter and third quarter.  In other words, the economy will stall, but will restart quickly enough to avoid the technical definition of a recession, which is two quarters of negative growth in a row.

Essentially, UCLA is predicting that the first half of 2008 will feel a lot like a recession, but won't meet the technical definition.

I'll flesh this post out later in the morning with more details, but wanted to get it up so you can weigh in with your thoughts on where the economy is going.  Thoughts? Comments?

Comments

[LeavinLA]

Allow me quote William Goldman. He was speaking about Hollywood, but it applies anyway:

"NOBODY KNOWS ANYTHING."

We've never seen this specific combination of variables before. Everyone is guessing. Come back in 5 years, I'll tell you EXACTLY how far we're going to drop this year. And remember, 82.6 percent of all statistics are made up on the spot.

This study could be dead on. It could also be miles off.

Just live your life.

[miguel]

If it walks like a duck and quacks . . . . .

or

A rose by any other name is still a rose . . . .

So if it will feel like a recession, what does that mean?

[Michael Snyder]

Pardon me while I fetch a shovel. There's an old joke about PhD. meaning piled higher and deeper and this is the proof. This morning the Fed announced they would "lend" to banks using the very paper the market has deemed as worthless as collateral. The stock market has jumped over 200 points on this news, not surprising since the only thing Wall St. likes better than a tax payer bail-out is a lotto sized bonus cheque.

I'm going with Warren Buffet who said, "By any common sense standard, we're in a recession right now." The Fed 's propensity for cooking the books is well documented and relying of their information is a fool's errand. From where I sit the Fed's economic policy looks like the proverbial ship of fools and now Edward Leamer's bucking' for CPO. (chief petty officer) The bad news is it's taking on water fast and as an emergency measure Capt. Bush has the crew straightening the deck chairs.

[JesusCrispy]

I'm glad I turned down UCLA for another school. I don't think the faculty is in touch with reality.

[Tired of the politically correct]

And they would be wrong!!!
We're already in a recession and a depression could follow if the government doesn't stop tinkering with printing money that has nothing to back it up and interfering with the housing market that needs to seek it's own bottom with no assistance from the idiots in Washington who are owned by NAR, CAR. NAB, etc

[dav]

Just for reference the "two consecutive quarters of negative GDP growth" definition, while widely quoted, is not the official definition as used by the National Bureau of Economic Research, which decides when we are (or were) in a recession. The standard they use is:

"A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough."

A couple more months of numbers that we've seen for Jan and Feb, and I think that this definition will definitely apply.

Also, the mild 2000 recession did not meet the "2 consecutive" rule, but it was still labeled a recession.

[peter m]

No sir, there is no recession. I see long lines of vehicles lining up at arco desperately trying to get the cheapest gas at 3.29 a gallon. Abundant pent up demand for $3.29 gas will keep the LA local economy humming.

The feds pumping of counterfeit offical worthless greenbacks in an attempt to stave off recession does seem to be working . Tons of devalued worthless dollars are circulating thru thr economy thru the non- stop Fed printing presses, while inflation is running at 7-10%( the real rate not the phony PR 4% put out by the fed agi-prop spin meisters .

Is it a good strategy to have 7-10 % inflation and keep employment figures at 5% than the reverse, low inflation and high unemployment.? The Fed is fighting to stave off a serious destabilizing deflation, and will do whatever it can to to reinflate the economy.

[CD]

I always heard they had great drugs at UCLA, so whatever those guys are smoking this year pass it over here in the SF Valley where businesses are closing left and right.
Inflation,recession,stagflation,depression,whatever......
People are hurting bad and are fearing the worst...

[mike]

im just glad to be @ work this morning

[GeekSeek]

Here's the kind of thing that makes you wonder when you read reports like this:

"After the 2001 recession, 358,000 manufacturing jobs were lost in California, UCLA economist Ryan Ratcliff noted. By comparison, the state has shed 55,000 financial sector and 106,000 construction jobs since 2007." They compare jobs lost during an entire recession to the amount of jobs lost *before* we even get officially enter one.

I'm sure many are all for putting a positive spin on things, but is this the way to do it?

William F. Buckley quote of the day: "“I won't insult your intelligence by suggesting that you really believe what you just said.”

[Eric Toya - LWM Blog]

"...although it will still be miserable for many Americans."

You know what they say, it's a recession when your neighbor loses his job, but a depression when you lose yours.

[mad_as_hell]

Isn't this the same group that was so positive about the housing market a couple of years ago and predicted no downturn?

[TakeFive]

Nonsense.

Californians are so dependent on their cars that the hike in gas prices will disproportionally affect this region of the US. Coupled with the rise in food prices, there is probably very little left over in many people’s budgets for “economic stimulus”.

I’ve already nixed the prepayment on one summer activity due to a tighter budget. It wasn’t much - $1500 – but it would have been spent in southern California.

And then we’ve got the Fed saying that it’s more important to restart the economy than worry about short term inflation – just ahead of another expect rate cut. We’re already being prepped for $4 gallon gas; anybody have a guess when we’ll see $5?

[LA-renter]

It's worth emphasizing a caveat in the LA times story:

Leamer said the economy would be sputtering. It remains so fragile that "if there is a quick halt to consumer spending, we will for sure have a recession in 2008," he added.

Like the beloved elephant Horton (the-who-listener) crossing a rickety rope bridge, Leamer predicts the economy will make it across.

Leamer should try the bridge-crossing game at the movie website... It's not as easy as it looks!

[Laker]

UCLA might be right, there will be no recession. Because there will be a STAGFLATION as in depression with inflation.
Prices are going up, incomes are down (people lose their jobs) cost of living is killing the population and the FED is printing more money...
California is sure in a recession for the last 3-4 months now...and it sure will last at least another 6-9 months.
Now, if as they say, and there is no recession, why does the FED lower interest rates? Why does he do these money auctions and back them up with worthless mortgage securities...

[CD]

So our FEDS just bought 200billions of worthless paper today. Banks are happy. What don't we set up our own money printing shop just like the feds... I'll sell you one dollar for one cent,because that is about what it will be worth next week. We could also start a barter system....
We stop buying completelywith useless money and swap stuff. As money no longer means anything.......
Do you remember the movie " Things to come" 1936.
No longer a sciences fiction movie. Rent it.

[MyLessThanPrimeBeef]

Recently, some researchers (professors probably) found that chimps were smarter than college students.

But with this, now we know for sure that chimps are also smarter than professors, even though the researchers somehow, hmmm...wonder why..., didn't include professors in their study.

[Tombstone Realty]

Was this before, or after, the price of oil hit $108 a barrel?

Several people in my office have taken to riding their bikes to work, instead of driving - or using the bus. They've also started taking lunches to work - where once I had the choice shelf, now I have figure out where it will fit.

Much like the rest of my budget. But luckily I have no debt, and my "stimulus" check is going right into savings. The government has screwed me over already with this bailout, and if I should lose my job due to this "non-recession", I know they'll just call me a "deadbeat" and drop me off the unemployment statistics in 60 days.

[Ernest Aguilar]

I cannot believe so called "economists" First, the feds last year the feds kept raising interest rates while gasoline prices were going through the roof. The feds said the same thing basically "we are afraid of inflation". End of last year and beginning of this year the Feds say "we are afraid of a SLOW down and we need to try to stop a recession" our Lame Duck President gives us a handout that will not do anything and no one will get till the summer. Now the UCLA "braintrust" says that we are not going into recession.... I have one question for the feds and this one phd..... If the citizens of the great country spent 1.5 trillion of their income on gasoline last year.. how is this NOT going to affect the economy??????? the oil companies are definietely not sharing... I was going to buy a flat screen TV, I can't afford it now because all the extra money I had is going to gasoline... now times that by the population of the USA... AND WE ARE NOT IN A RECESSION???? Give me a break. That's a pretty irresponsible statement from this UCLA PHD and it's even worse that the media give this fool an ear, and the LA Times puts it on the FRONT PAGE....

[JMar]

I'll believe it when I see it. I don't really trust UCLA's opinion. I'd like to see what RAND has to say, after all they have been working in the Public Policy field a lot longer!

[Laura-LosAngelesRealEstateTalk.com]

...of course we're not in a recession. If we were and if the fellows over at UCLA wrote about it, it might deter donations from those who pay their salaries. Do I hear 'spin'?

[Rich]

Economics departments are invariably the exception to the claim by conservatives that universities belong to the left. In the case of UCLA, these guys sound like they belong to the Larry Kudlow school of economic propaganda. I guess we know where all those legendary California Republicans are hiding...

[problemwithcaring]

Isn't this the same group that was so positive about the housing market a couple of years ago and predicted no downturn?

Posted by: mad_as_hell

Nope. A few years ago Christopher Thornburg & UCLA's Anderson school were all over the housing bubble. I guess the new Leamer-headed institution is still seeking that Contrarian Title -- just minus the the "astute judgment" part...

[Jason Hoppe]

They are correct, no recession is coming....

Cause we're already in it!

[JohnnyB]

UCLA: No recession coming…

That headline won out from these close contenders…

UCLALA: Recessions and gray matter, a thesis

UCLALA: How to boost our irrelevance factor

UCLALA: How to regurgitate flawed data

UCLALA: Recession double speak 101

UCLALA: Can we play too?

UCLALA: The unbiased truth

UCLALA: Agendas, a short story

UCLALA: It’s all good… words to live by