Pale Recession

Categories: Econ, Metrics

Even economies can look pale, according to ex-Fed Chair Alan Greenspan. Greenspan-the-Man served almost two decades as the Chairman of the Federal Reserve. His long tenure allowed him a lot of time to make a lot of terms, including “pale recession.”

A pale recession is when there’s a clear economic recession, but one that’s hitting certain areas more slowly than others.

This brings us to an economic, philosophical question: what is a recession? Where do we draw the line?

The truth is that there isn’t a hard line. In general, it’s when real GDP goes down, and stays down (or keeps going down) for at least a few months. Usually that’s accompanied by spiking unemployment, lower consumption...all those little macroecon indicators. If any of those indicators is looking well while GDP is looking ill, the whole economy is looking pale.

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Finance: What is Recession?15 Views

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finance a la shmoop what is recession well here's one here's another and

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another and well here's an economic recession so technically when GDP [Set of teeth appear]

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declines for two sequential quarters that is a recession and you can glean

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enough from this most excellent chart that in most years GDP grows not

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massively but relatively steadily and with compounding the US has grown GDP

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from a trickle to a torrent in a recession economic activity declines [Recession definition appears]

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maybe a half a percent a percent maybe two percent and you might not think

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that's a big deal but we're a nation living on credit that is plastic these [Man using credit card]

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things mortgages car loans bunch of other credit II kind of things so a

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decline of even 1% when we were expecting growth of two is a delta of 3%

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and that change is exacerbated with leverage when people fear for their job

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safety they stop buying those extra pairs of earrings at the mall they get [Woman biting her nails]

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one less tattoo and they stop making appointments at Botox Depot so all of

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the sudden activity in given quote luxury sectors or otherwise unquote just [Person receiving a tattoo]

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stops dead and there's a multiplier effect here as well because a wealthy

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banker who used to throw 20 parties a year now only throws four so all those [Calendar displaying party days appears]

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bartenders and oboe players and ice sculptors yeah they're all out of work

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as well and then they buy less beer and that new ice pick the sculptor was gonna

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buy yeah well she'll just sharpen her own and make do with it you know until

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the GDP grows again after the recession is over in a few years so yeah [Boom/bust cycle appears]

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recessions they're dangerous and credit high credit makes them all the more

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dangerous so be wary

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