Tuesday, February 26, 2008
The "R" Word
Even though the word "recession" is nine letters long, if you talk to an economist about it, you would swear they treat it as a four-letter dirty word, which maybe explains why they don't want to use it. Had an interesting chat with an interesting chap the other day about the state of Michigan's lackluster economy. Mitch Bean is the head bean counter for the House Fiscal Agency which is a bunch of economists hired by state lawmakers to figure out all things economic. Sometimes they get it right, other times they don't. (See economic recovery that is just around the corner.) "So are you using the "R" word?" our little exchange began. "No," was his terse and direct response. (Economists, unlike journalists, don't get paid by the word.) When you get a short answer, you instinctively know there is more to the story. Bean did admit that Michigan could be in a recession right now, "but we may not know it until it's over." How convenient for someone who doesn't want to use the "R" word. But let's be real here. Most consumers believe we are already in a recession even though Bean and company don't want to concede the point. Even so, he reflects that consumers may be pulling back on their spending because of that attitude, but that still doesn't constitute a recession he insisted. So let's see if we have this straight: Even though we all behave as if there is a recession, we're really not sure there is one because we won't know it until it's over. Now don't you feel better? And now you understand why economists get paid so much money. BTW. After the interview Bean smiled, "You tried to get me to say it, but I didn't." Of course not. It's a four-letter word.