Thursday, August 28, 2008

Economy growth can be a mirage

Economic growth between 2.5% and 3.5% is typically viewed as the norm for a healthy economy.

But that doesn't mean that the United States has avoided a recession, some economists say. In fact, there are growing concerns that weakness will extend through the rest of this year and even into 2009.

"My feeling is that the recession started in the fourth quarter of 2007," said David Wyss, chief economist with Standard & Poor's. "I think the worst quarter will be the first quarter of 2009, which would make it a long recession."

The National Bureau of Economic Research, a research group charged with dating the start and end of recessions, looks at factors such as payrolls, industrial production, real income and sales when determining when recessions begin and end. It has yet to make a ruling about the current state of the economy.

But many economists say temporary factors, such as the more than $90 billion in economic stimulus checks that reached taxpayers during the quarter, make the jump in the second quarter an anomaly.

The economy grew at just a 0.9% rate in the first three months of the year and declined in the fourth quarter of 2007.