Redefining Recessions

As we become increasingly obsessed with the possibility of an impending recession,

(Chart shows use of the word "recession" on blogs, via Aaron Schiff)

former retail analyst turned author Joseph H. Ellis argues for rethinking the way we understand business cycles:

Abolish what I call the "recession obsession"--the undue attention given by economists, journalists, and politicians to recession as the primary measurement of economic harm. A recession is generally defined as two successive quarters of absolute decline in real gross domestic product, or GDP. But by the time real GDP is in actual decline, its rate of growth will have been falling from its peak for as long as 18 to 24 months, and typically we will already be deep into a bear market. By this time, business conditions, corporate profits, and the stock market will have been getting progressively worse for more than a year, and it is far too late for businesses and investors to get out of the way. We must literally redefine the economic downturn as beginning when rates of growth peak and begin to slow, as opposed to when the economy is in actual decline.