What is a recession?

With this week's GDP number there has been a lot of commentary on the current state of the economy. A recession can mean different things to different people. Whether it is 2 consecutive quarters of negative GDP growth, or just 2 quarters of negative GDP growth, or maybe the conditions that the average American consumer is facing. The National Bureau of Economic Research has the final say. Most macro economic classes teach the first definition mentioned above but as you can see from the last recession in 2002 the quarters of negative growth were separated by one with positive growth. Since there is no concrete definition why should we be arguing about the current economic conditions. Bottom line things are bad and whether it is a recession or slow growth it really doesn't matter because the Fed is taking action it feels is necessary to correct the housing/credit crisis.

This is a big week for the markets with the GDP number, a Fed meeting, Jobs reports and continued corporate earnings. Look for more analysis to come!