Another Recession, Already?

J.D. Foster / August 12, 2010

When economists forecast the economy, they tend to draw straight lines. They figure out where we are and where we’re going, and they plot a line. In fact, neither contractions nor expansions are ever smooth. For various anomalous reasons in the economy and in the data, reported GDP movements are jagged. The reported economy accelerates, slows down, jumps, and pauses. So one ought to hesitate before reading too much into the latest economic data. However …

The recent report on second quarter growth showing a reasonably strong 2.4 percent pace was, as usual for a first read, based on incomplete data. It many respects, the economists and statisticians at the Commerce Department’s Bureau of Economic Analysis do a great job offering an educated guess. But as the more recent trade data for June suggest, this guess was a bit off. (more…)