Are We Still In a Recession?

People worry about the economy and whether we are making it out of the recession. Are we in a recession? Apparently 43% of Americans think the economy is in recession while only 28% thought so in July (as reported by IBD 12/1/05).

The facts are that America has doubled its total wealth over the last decade, to $50 trillion. The GDP is growing at a 4.3% rate, unemployment is down to 5%, core inflation is at 2%, energy prices are dropping (gas in Sandy is $2.04 per gallon), predictions from many sources are for continued growth next year in the 3-4% range, the dollar hasn’t declined as predicted, and interest rates still remain relatively low.

But the most remarkable fact is that if the economy continues to grow, as is predicted, this will be the first time in history that the economy will have gone through a significant Fed tightening (it raised rates incrementally 12 quarter points) without a slowdown or recession. In a speech Alan Greenspan remarked that the most surprising thing to him during his service as Fed Chairman was the resilience of the U.S. economy. The economy has withstood several disasters without faltering that in the past always dragged it down. He found that a new phenomenon and truly remarkable.

By no economic indicators are we in a recession; just the opposite has been true in recent years. Now why, in the face of positive economic facts and good news about the growth of the economy do so many people think we are in a recession?