Did I miss something in grade school math?

I believe it was George Bernard Shaw who said: "If you laid all the economists in the world end to end, they still wouldn't reach a conclusion." Sound like this one jumps to the wrong conclusion.

Look at it this way: Suppose 100 people have $100 and the next year 102 people have $101. Yes, $101 is more than $100, but each person has a penny less.

Suppose last year gas cost $3 and this year$4. Same for bread and milk.

Suppose last year your dollar bought 0.80 euros and this year 0.70 euros (illustrative inaccurate figures). OK already you only buy Asian stuff.

We need more immigrants at low wages, or tomatoes will run a shortage. But who picks tomatoes in Italy; and why are they so much better?

The numbers are all rigged anyway, so how can you trust any of them? Use common sense. More people are out of work. More people have either stopped looking for work, or are working part time because that is all they can get. Gas and food prices are skyrocketing at the same time most people's incomes are stagnating. People's outlook has dropped to its lowest level in decades (why? because the majority of people are having a difficult time). In my area, the pawn shops are getting a lot more business, with people bringing in items in exchange for money just so they can afford to buy gas to fill their cars, with only half the people returning for the items.

Yet:

The unemployment rate stays about the same, and even drops .1%.

Inflation only goes up a small amount.

All indicators that are publicized are not too bad.

The reason is, all the volatile items are taken out of the inflation rate, and all the people who give up searching for jobs are left out. If you used the same formulas used in the 1980s to figure out our financial health, you would get:

A huge increase in M3 money supply (hence the drop in value for the dollar) over the last few years, beginning in 2004 when they dropped tracking this supply in government reports.

A GDP annual growth rate (current) of closer to -3%. And since 1992, never over 2%.

An annual consumer inflation rate of nearly 12%.

And an unemployment rate of at least 13%.

People are smarter than that. Most ordinary people feel that they are in an inflationary recession. Because they are.

Pretty close!

but GDP. Recessions are defined by a reduction in GDP, not decline in purchasing power (inflation). And the figure cited as showing a recession was a positive number, ergo, no recession.

The Great Depression was characterized by deflation, not inflation.

An annual consumer inflation rate of 12 %. Using the rule of 72 (divide inflation rate into 72 and you get the period in which a price doubles). Call it 24 yrs since the 1980's. 4 doubling times, so everything would cost 16 times as much. Gas should be $16 a gallon.
Even at the astounding increase of the recent several years, it is not.

I remember the misery index of the Carter years, lived through it. We're not even close to that.

He/she wasn't saying that inflation had consistently been running at 12% annually since the early 80s, rather that the current growth in M3 was in the high teens and that inflation was much higher than the 4% officially reported. Even taking a conservative 6%, we have been in recession for some time.

stop:

GNP did decline and they went to GDP because they did not like the way GNP reflected the economy is such matters as recession, which we are in today.

GDP is what counts. If GM is making scads of money in Europe, it is good for the stockholders but doesn't help the guy in Youngstown who has been laid off.

You are talking inflation, and I will grant you that the CPI is crap. I haven't bought a house in years, so the cost of housing is essentially irrelevant to me. On the other hand, we have 5 drivers in the house, so the cost of gasoline is very apparent to me (though 2 of the five are college kids so they don't pile up a lot of mileage).

BUT, HERE'S THE DEAL: inflation does not equal recession. High inflation leads to recession, but you are talking 2 very different things.

And was your 6% figure a SWAG? You have some responsible economist saying this? Remember, the main reason we have economists is to make the weatherman look good.

1. Official CPI headline inflation has been over 4% for the last 5 months. Even this number is suspect because of hedonic substitutions.

2. The BLS doesn't use headline CPI numbers to arrive at real GDP growth. It used 2.8% instead of 4.2% inflation for 2008Q1. Don't ask me why.

3. Nominal GDP growth was 3.4%. Had they used headline CPI real GDP would be minus 0.8%.

Stop:

GNP measures that overseas money (as you know) and it declined. Given globalization, if GM loses money overall, it is possible that a company would lay off people in any country regardless of whether that country is profitable or not. Making money in one country as opposed to another does not guarantee a job in a global economy.

Furthermore, GNP measures the income of all nationals, whether abroad or not, minus any income by foreigners within country. Since the US discussion is whether the country has contracted into recession and if Nationals are making money, the GNP certainly reflects whether such is occuring as GNP has contracted.

it is highly unlikely a company would lay off employees from a profitable line of business/factory UNLESS they feel that they can boost efficiency by doing so. Since most companies are already running as lean as possible, probably there isn't much room for that. So if your division is making money, you are probably ok. I suppose the other possibility of being laid off is if your division isn't an end product division--if you make parts for cars that aren't being made, yeah, you're out of luck.

A huge part of the decline of overseas money is the exchange rate--and until we accept more inflation in this country, foreign "dollars" will not flow into the US. But isn't the inflation rate what some of the posters are carping about?

indicator. There are endless arguments about what to include in it. Even a simple thing like food is hard to account for. Sure, if you buy a loaf of bread, it looks easy, but look at your bread choices in any "superstore." What about electronic devices--serious deflation in prices there with incredible increase in features. Cars? They're more expensive but have many more features than they used to. TVs?

Most of us buy bread every week, but might go a decade before buying an appliance, a car, a new house. This is a metric that the government must have, if only to raise Social Security payments, but as you said, why should BLS use one number and the headline CPI be another? Which one is the one the average Joe sees?