Monday, December 3, 2012

WORLD: RECESSION AND HYPE

Tell us please, where is recession?

So while NBER struck panic buttons and started calling some economic activity a “recession” somewhere in the middle of 2007, data was strangely not supporting their claims circumstantially.

From Q2 of 2006 till Q3 of 2008, we provide you the running figures of US real GDP growth finally available: 2.6%, 2.2%, 2.5%, 0.1%, 3.8%, 4.9%, 0.6%, 1%, 2.8%, and 0.5% respectively. Technically, the US has still not entered recession. It’s a similar case with Europe. And India and China are another story altogether. It leaves us stumped to the reasons why NBER might have played the soothsayer’s flute when none was required. Mark Mobius, MD, Templeton Asset Management, EuroFinance and some others have confirmed that recession, technically, has never happened. And NBER? They claim that they consider “a wide range of indicators of economic activity [other than GDP].” And how are these ‘wide range of indicators’ weighted against the GDP? Here’s the clincher: “There’s no fixed rule for how the different indicators are weighted.” Ah Shylock, beauty is in the eye of the beholder, and the devil lies in the detail.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

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