Wednesday, April 02, 2008

Did Bernanke realy say that the economy may slip into recession

The headline of the Bloomberg article by Scott Lanman certainly seemed to indicate that Bernanke had used the "R" word: "Bernanke Says U.S. Economy May Slip Into a Recession", but a review of Bernanke's prepared testimony and press reports of his testimony do not reveal any cases of him saying words to the direct effect of "the U.S. Economy May Slip Into a Recession." Bernanke did say (in his prepared testimony) that "It now appears likely that real gross domestic product (GDP) will not grow much, if at all, over the first half of 2008 and could even contract slightly", but a slight contraction would not meet the bar for an outright recession, which requires a significant contraction or as the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER) puts it, "a significant decline in economic activity spread across the economy, lasting more than a few months."

Shame on Scott for the misleading headline.

-- Jack Krupansky

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