Here’ what Phil Gramm told The Washington Times:
“You’ve heard of mental depression; this is a mental recession,” he said, noting that growth has held up at about 1 percent despite all the publicity over losing jobs to India, China, illegal immigration, housing and credit problems and record oil prices. “We may have a recession; we haven’t had one yet.”
“We have sort of become a nation of whiners,” he said. “You just hear this constant whining, complaining about a loss of competitiveness, America in decline” despite a major export boom that is the primary reason that growth continues in the economy, he said.
“We’ve never been more dominant; we’ve never had more natural advantages than we have today,” he said. “We have benefited greatly” from the globalization of the economy in the last 30 years.
Obama replied, “He didn’t say this but I guess what he meant was that it’s a figment of your imagination, these high gas prices.”
That’s neither what Gramm said nor what he meant.
At least one blogger has taken the smear further: “You see in the world Gramm and McCain move in there is no pain, no lost jobs, no wage depression, and no choices between gasoline and other items.”
Gramm didn’t say that either.
Todd J. Gillman claimed in The Dallas Morning News that Gramm said America’s “economic complaints are mostly ‘mental’.” No, he didn’t.
It turns out that the term recession has a technical meaning of “a decline in GDP for two or more consecutive quarters.” We’re not in a recession. Furthermore, all is not doom and gloom in the economy. That was what Gramm said, and that was what he meant. He did not dispute the fact that gas prices are high, that the housing market is mess, etc. He merely said that, as of yet, the sky has not fallen. At most, he could be criticized for overstating American dominance.
By the way, of the several accounts I’ve read of the debate, not a single person has even attempted to dispute Gramm’s factual claims.
I’m not too concerned about the formal definition of a recession; the economy is having trouble, whether growth is barely positive or not. The “mental recession” I’m worried about is the one that allows Gramm’s comments to be taken grossly out of context to generate countless bogus “news” stories. Wouldn’t it be nice if the presidential race were actually, you know, about the real issues and stuff?
One thought on “America’s Mental Recession”
It turns out that the term recession has a technical meaning of “a decline in GDP for two or more consecutive quarters.” We’re not in a recession.
That statement sounds like it came from Ben Bernanke himself. You’re generally more careful and thoughtful in your reporting than this.
Whether or not we’re in a recession can depend on how you calculate GDP. The federal government calculates inflation (and thus inflation-adjusted GDP) differently than in the past. Many economists believe these new numbers report inflation lower than actual, and thus GDP higher than actual.
True inflation and GDP are difficult to perfectly define and measure, so the subject of what the “actual” is could be a rat-hole. I think the government has a lot of motivation to do what it has been accused of (understating inflation allows for lower entitlement payouts and less attention to the printing presses over at the Fed)…so even if the folks at ShadowStats are off (over-calculate inflation) I think it is fair to eye the governments numbers with skepticism as economists do.
Anyway, the new methods make it more difficult to actually achieve a technical recession relative to the old methods. What might not be considered a recession today might have been in the past.
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