This Is Going To Be A Bad Recession

GDP fell .3% in the 3rd quarter of 2008, compared to 2.8% gain in the second quarter. While a recession is technically defined as two consecutive quarters of negative GDP, everyone can see the party is cashed. Marketwatch wrote, “Economists expect the economy to contract in the final three months of this year and the first three months of 2009, with the nation’s unemployment rate pegged to rise near the 8% mark.” Housing bust + oil shock + financial crisis + rising unemployment + high levels of personal debt and low saving rates = sad America. This can mean only one thing. Now is the time to enact my plan for WPA-style moon-farming programs.

GDP falls 0.3% in third quarter on dive in spending [MarketWatch]


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  1. AMetamorphosis says:

    According to an article @ ( [] )

    Banks are now seeking to forgive credit card debt …

    What a fool I’ve been living within my means, driving a 7 year old car and buying a modest little two bedroom home …

    Perhaps a 50k credit card shopping spree is in my near future.

    • Meggers says:

      @AMetamorphosis: Tsk Tsk. If only you had bought a McMansion, a new car every year for everyone in the family (yes that includes the dog) and racked up thousands of dollars in CC debt by buying the latest gadgets and going on the nicest vacations.

      I feel the same way as you. I bought a home I could afford (10% down and 30 year fixed) at a low point in the market, have a car that I bought used and paid in full at time of purchase and my husband and I are waiting until we have 20k in savings before we decide to have kids. Feels like we are missing out on all of the goodies because we decided to be responsible.

    • Anonymous says:

      Actually the article states “These consumers would then get five years to pay off their remaining card debt, interest-free” So it’s not forgiving the debt, just providing a 5yr intereset free loan. Still not bad.

      • concordia says:

        @GiuseppinaDolon: They’ll still get a portion of their debt wiped out, then whatever remaining percentage is paid back over five years at no interest.

        It seems like it’s the equivalent of the write-offs they now provide people that are seriously behind on their bills with the addition of the no-interest five year extension plus getting to massage their books a little.

        A few days ago I got a letter addressed to a woman that lived in my apartment before me. Apparently since she hadn’t paid her bill in over three years they were going to knock down her $16,000 owed to $4,000.

        As someone that always pays their cards (I’m working on a debt snowball right now, actually), it left me kind of miffed. Where’s my help, eh?

    • ILoveVermont says:

      @AMetamorphosis: I too have been living within my means. Up until now, I’ve supported the bailout as being necessary…but if folks are forgiven large portions of credit card debt, I won’t just feel like a fool, I WILL BE ONE. I totally fail to understand what the hell is going on here…

      • este says:



        Looking forward to Obama spreading my money to people with entitlement issues.

    • bohemian says:

      @AMetamorphosis: I am starting to become quickly annoyed with the entire situation. The people that recklessly caused this by using credit cards for all the bling they couldn’t afford and sketchy loans for McMansions are now being rewarded for their bad behavior. They need to put a cap on federal home loan rescue programs to not help anyone in a house over 2500 sq feet.
      Ironically the people that will probably have their McMansions and credit card debt bailed out were dissing me for living within my means through the boom and “acting like a pauper”.

  2. Bladefist says:

    I think Christmas will bring the GDP up, and so we will once again avoid a recession.

    • AMetamorphosis says:


      Not for our family this year.
      We made a pact to give donations to charities in one another’s names because they are suffering the most right now.

    • kthxbai says:

      @Bladefist: are you insane!? WHat company do you work for? Here on wall street its insane…. I honestly dont see how you can be so optomistic… yes the entire 2 months of black friday sales and junk might help, but I dont think it will be anything like a solution…

      • Bladefist says:

        @Etaripamai (XBL): I live in the midwest. While we have economic pains from the coast, it’s not nearly as apparent. You may live it everyday, to us, its news from a far away land. I’m not saying it wont make it here, but we aren’t in panic mode.

        @lpranal: Last year we have
        similar articles. And Christmas sales went up.

        @AMetamorphosis: Well, thats noble. I see the money through, make sure it gets to the people in need. I’ve worked in non-profits before, and Its disgusting where the money goes (in bigger organizations).

        • DeleteThisAccount says:

          @Bladefist: Not sure where in the midwest you are blade, but in the wealthy chicago burbs, my talks with best buy account managers revealed that they aren’t even doing seasonal help this year, but instead are cross training employees from less popular holiday sectors (appliances to home theater, etc). I don’t think it’s going to be a merry Christmas for retailers.

          • Bladefist says:

            @AngrySicilian: Kansas City. It’s just my prediction. I typically predict optimistic, because I am an optimistic person when it comes to America. And pessimistic when it comes to our government. I think Americans will continue to shop for loved ones and the same rate as before. If im wrong, I’m wrong.

            • lpranal says:

              @Bladefist: for what it’s worth, I’m optimistic overall as well. Optimism for me, however, takes over where facts leave off. The facts and numbers give pretty clear predictions for the short term, economically (within 6 months to a year) but after that, I think anyone who claims to know the future is full of BS. On the plus side, I think America will emerge out of all this smarter, more productive and this time, everyone will benefit from our recovery, not just the wealthy few at the top. How’s that for optimism?

              • Bladefist says:

                @lpranal: The media, the “experts” always seem to be pessimistic. In the past few months, whenever the GDP has risen, there has been 0 talk about it. Rising GDP is boring. It’s not news. I’m a software programmer. Not an expert. I believe in the American people, and I believe in the market. As a software programmer, I believe the GDP will increase. Take that for whatever it means. Don’t make any financial decisions off my predictions.

                • IamNotToddDavis says:

                  @Bladefist: What I think people are forgetting is that we’ve had much worse GDP downturns in the last twenty years, and there weren’t any problems even remotely close to what happened in the great depression era.

                  The reports of the demise of the American economy are greatly exaggerated.

                  • stevejust says:

                    @IamNotToddDavis: Where do you live? a Cave?

                    We’re not just talking about a GDP downturn. We’re not just talking about high unemployment. And we’re not just talking about a credit buble bursting and a housing deflation. We’re talking about all of this stuff happening AT THE SAME TIME.

                    • Pylon83 says:

                      If you’ve paid any attention to the news lately, the credit problem is effectively being solved. I’ll give you the housing issue, but part of it’s simply a correction for over-value in the past couple of years.

                    • IamNotToddDavis says:

                      @stevejust: No, I don’t live in a cave. Where do you live? Unemployment is at around 6.1% right now. While this is higher than where it’s been over the last 8 years, it’s not anywhere near as bad as even 1992, and we didn’t have any “great depression” scenarios then. Your not putting the numbers in perspective in terms of past years.

                      I tell you one thing though, the housing bubble and the credit bubble NEED TO BURST before the economy turns around.

                  • Tmoney02 says:

                    @IamNotToddDavis: at least part of the reson the numbers dont seem as bad as in the past is becuase the numbers themselves have been changed over the years. For example the way we calculate unemployment has changed several times over the years. Man of the numbers you hear on the news mean little and dont give an accurate view of the state of the economy.

                    Here is a great article from the May 2008 Harper’s Magazine about how politicians from both sides of the aisle for the past 50 years have slowly changed the economic numbers to make things look better than they really are.

                    Numbers racket: Why the economy is worse than we know

                    • IamNotToddDavis says:

                      @Tmoney02: What I do know is that the bubbles have popped in both the housing market and the oil market. This has caused painful adjustments in the other markets, but they are adjusting. What is not needed right now is for something to slow down the adjustment period. Many argue that the Great Depression was prolonged by government programs that extended the adjustment period for the various industries affected. Greedy companies who made bad investments need to be allowed to fail. The housing prices need to come back down to earth. Gas prices have already begun to do so. I have full faith in the American economy to pick up the pieces and move on like it has every other time there has been a “recession” like this.

                      But please, don’t let me stop everyone from panicking. Because one thing for sure, nothing will help us more than people panicking while they point fingers at the various people responsible.


                • Trai_Dep says:

                  @Bladefist: As a professional programmer, what would you think of someone completely unschooled in programming assuming leadership of mission-critical software projects.
                  You’d snort of snicker and run the opposite direction, right?

                  So apply the same logic to people who actually know about economics saying we’re heading towards rough sailing, and unschooled people asserting, with no factual basis, that they’re right and the experts are wrong. Any reasonable person would look askance at that guy, right?

                  Compare/contrast the two reactions, and see if any differences are justifiable.

                  And regards your comment about wasteful, extravagant non-profits: try volunteering for progressive ones, and you’ll see that the run a tight ship. Not all, but generally this is the case, especially the smaller or more grass-roots ones. Which ones did you work with, out of curiosity?

                • stevejust says:

                  @Bladefist: You’re a software programmer and you don’t understand physics — i.e., that the sun makes energy?

                  What the…

            • West Coast Secessionist says:

              @Bladefist: Thanks for being optimistic. It’s clearly more likely to help our economy than accepting the recession as a foregone conclusion. I mean, that’s why they track “Consumer Confidence”!

              I definitely wish I wasn’t currently in the throes of deleveraging my own budget, because I’d like to be “part of the solution” too but I am not going to have much for christmas gifts this year…unless you count big payments to old friends Citi and Chase as gifts :)

        • lpranal says:

          @Bladefist: and yet, the GDP growth in Q4 last year was anywhere between .6 and -.2 (depending on who you ask []), DESPITE consumer confidence being much higher in 2007 than it is now (october last year was in the 90s, this year it’s in the 30s).

          I also live in the midwest and couldn’t disagree with your rosy outlook on the effect of the recession here. There’s a few businesses that have folded recently in my city, and home prices are definitely still sliding

        • AMetamorphosis says:


          You are right! And we are working with charities we can directly assist …
          It will be nice to thumb our noses @ all the retail giants this year … and I already feel more Christmas spirit than I have in years :-)

        • lpranal says:

          @Bladefist: also I’d like to point out that many incorrect articles are written every year about any number of things, and your assumption that their incorrectness ensures our economic stability is a fallacy Non sequitur

        • kthxbai says:

          @Bladefist: Ok, Thats understandable, I am no longer filled with rage, but still… thats a pretty naive statement, that the hidays will save us all… idk, possibly adjust so its not like “full scale” but, I dont think it will change anything drastically.

          • Bladefist says:

            @Etaripamai (XBL): Also the election will have been determined. That will take away some of the uncertainty.

            • Pylon83 says:

              Agreed. I think once the election is over, people will become more confident, especially if Obama wins. Not necessarily because he will do great things, but the fact that it’s a change. The current policies clearly don’t/didn’t work. Whether Obama’s will or not is arguable, but I think the mere possibility of positive change will make people more confident in the direction of the country and the economy.

            • kthxbai says:

              @Bladefist: ahh my friend (no mccain support pun intended)I was waiting for someone to bring this up… It may provide a “calming” of the markets, but i dont think it will provide an immediate change (unless everyone decides YAY lets spend money) and the long term turn around may still be far off. Im not sure if the market will change until bush is out of office, but once Obama is elected and if he really does what he says hes going to do, then the turnaround might be in the future, however unlikely the “near” future.(note: the Obama statement is honestly just a stab at your icon and at your nidwestness. lol I dont believe in politics to vote for wither of them)

        • stevejust says:

          @Bladefist: Okay, I was about to respond and say, put your money where your mouth is about Christmas sales this year. But then I realized, if Obama gets elected, some people might be infused with an overwhelming degree of hope and optimisim, and Christmas sales might be okay.

          But I will bet you $1,000 if John McCain gets elected, we will officially be in a recession. Deal?

          • Bladefist says:

            @stevejust: “infused with an overwhelming degree of hope and optimism” wow.

            @Trai_Dep: The experts are always wrong though. For the last year they have screamed recession, depression, doom, and gloom, and it just hasn’t happened. The experts are always wrong, and so it opens the doors for the people who were right (me) about past recessions, to walk in and give their opinion. If the experts were always right, I’d sit down and shut up.

            • Tmoney02 says:

              @Bladefist: The experts are always wrong though. For the last year they have screamed recession, depression, doom, and gloom, and it just hasn’t happened.

              What the heck do you call the financial meltdown, socialization of the banks, many “big to fail” companies failing, 725+ Billion in Bailouts (25 went to automakers), government looking to buy people’s homes, etc. If that doesn’t show that those warning for the past year about doom and gloom were right I don’t know what would. A mad max scenario perhaps?

            • Techguy1138 says:

              @quagmire0: It would be nice if such events had visible event horizons from a distance. you only truly realize what is happening long after it’s to late to plan.

              The world banks ALL in near unison took extraordinary steps to avert a global meltdown.

              To say the press was wrong is like saying a man with a gunshot wound was fine because the doctor could save his life.

            • Trai_Dep says:

              @Bladefist: Which experts are always wrong? That’s the thing: you need to source your information, else you’re jumping off half-cocked. Progressive economists were pretty much on the ball over this: prudent regulation, transparency, policies that don’t concentrate wealth, etc. It’s rational, it’s sustainable, it’s sane.

              Lumping all economists in the same group deprives you from seeing what’s going on, to your detriment.

              If you don’t know what went wrong, and why, then you don’t know how to fix things, or prevent an elite, selfish few from destroying the global economy.
              And, with so much at stake for these craven individuals, you can be damn sure that they’ll be shouting far and wide “information” that justifies their destructive policies. The key is to evaluate where your information is coming from.

              And frankly, your data points suffer from credibility problems. Big ones. Reliably.

              You seem like a hard-working guy. Why would you want your money stolen from you under the guise of pleasant-sounding, soothing, market-tested words?

    • lpranal says:

      @Bladefist: Did you even read the article? Consumer spending is down by record amounts, decreasing at a record pace.

      Assuming we all do our patriotic duty and go and buy HDTVs and other stuff made in southeast asia, and that miraculously that causes our GDP to break even somehow, what do you think is going to happen around the end of the first quarter next year when people have to pay the bill for all the stuff they couldn’t afford

      Denial ain’t just a river in egypt, my friend.

    • DismalScience says:

      @Bladefist: Quarterly GDP data is seasonally-adjusted.

      The more you know…

    • bobcatred says:

      @Bladefist: Somehow, I don’t think Christmas is going to make up for the largest market plummet in recorded history, and the fact that the government basically handed $700 billion to companies with a proven track record of wasting cash, without sufficient measures in place to make sure that they didn’t do monumentally stupid things with it.

  3. frodo_35 says:

    Gasp no way how did we not see this coming. I am so shocked. I think we should stop all regulation of business and go shopping with the last of our cash to jumpstart the economy. Its our cristian and civic duty. Go Mccain were #1 were #1 were #1

    • AMetamorphosis says:


      Why use cash when the banks are going to forgive 40% of your debt? Us the plastic baby … Its the American thing to do!

    • Tux the Penguin says:

      @frodo_35: 10% unemployment? Where exactly do you live? You might want to look around and see if there might be some local factors that are causing such a poor economy right now?

      And don’t talk about being hungry unless you’ve got a complete day without eating. We’re whining and complaining about things that we have no business about. Our “hungry” is missing a meal. Some of us have gone through days were we choose not to eat so our kids can.

      And don’t play the “class envy” card. The ultra-rich are going to do things that you cannot. Get over it. If it bothers you that much, go make an example of yourself, get ultra-rich and then DON’T do that.

      We as Americans NEED this wakeup call. We’re too fat and lazy and wanting everything to just be taken care of. Sadly, I have a feeling that on Tuesday we’re just going to be signing more of our lives over to the government.

  4. Pylon83 says:

    Once the credit markets loosen and businesses start to work properly, people will become more confident in the security of their jobs and of their investments and then people will start to spend again. It’s not going to happen overnight, but it seems that the credit markets are starting to thaw, and Wall Street is reacting favorably to that. This will help get businesses going again and start the slow process of putting the economy back in drive. Not that things are good right now, but I don’t think it’s going to get as bad as people think. Governments around the world are working quickly to try and cushion the fall, and it seems to be working, albeit slowly.

  5. OldSpinDoc says:

    Like there’s such a thing as a “good’ recession?!
    Part of the problem is the media damn-near advocating for one. Too many shouting heads.

    • Pylon83 says:

      I sort of agree with you. The media has been blabbing about this and shouting gloom and doom for awhile now, which is scaring people rather than educating them as to what is actually happening and assuring them that the world is not going to end.

    • DeleteThisAccount says:

      @OldSpinDoc: I think we need a mindset-reset. Maybe there is such a thing as a good recession.

      • humphrmi says:

        @AngrySicilian: It depends on where you’re at in life. If you don’t get laid off, have a while before retirement, and money to invest in stocks, recessions are a good thing. It’s pretty hard to follow the “buy low, sell high” rule unless there’s a low. But yeah, for those who it does affect, it really sucks.

    • ironchef says:

      @OldSpinDoc: Yes there is. A short one.

  6. DismalScience says:

    “While a recession is technically defined as two consecutive quarters of negative GDP, everyone can see the party is cashed.”

    That’s a myth. Recessions are called by the National Bureau of Economic Research (NBER) Business Cycle Dating Committee.

    Read this: []

  7. wary_consumer says:

    You wrote “a recession is technically defined as two consecutive quarters of negative GDP”.

    Contrary to this conventional wisdom, it is the National Bureau of Economic Research (NBER)] who is the semi-official authority and tracker of the business cycle, and they define recessions as:

    “A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough.”


    They probably won’t even declare a recession until after its over

    • FrankGrimesJr says:

      @wary_consumer: I think to call it a flat-out “myth” oversimplifies things. Cool read though.

      But different economic analyst will look to different economic indicators to parse out economic realities from data. Keynsians can look at GDP alone. Monetarists are probably more interested in the effects of the availability of credit, interest rates, and the money supply.

      But for a quick and dirty analysis, Real GDP is a pretty good indicator.

      Oh, and I def. agree that the press is not helping things right now. Consumer confidence is right up there as one of the most important measure of our economy’s health.

  8. incognit000 says:

    Actually I would like to work on the moon. I think it would be a nice change of pace.

  9. frodo_35 says:

    Define the 10% unemployment rate in my county. Please define why santa will not be coming to some homes this year. Please define what it feels like to be hungry and see AIG execs go on a ultra rich retreat on the taxpayer dime. Please define what the numbers equate to in peoples real lives and how it feels to sign up for food stamps for the first time. Please define what I should tell the guy I have known has a hard worker all of his life why the new job at wallmart and the part time job delevering pizza will allow him to keep his house but not his family health insurance. I pray these things I am seeing are not hapening to you and I pray they don’t happen to me. But I see them happening.

  10. I love the Power Glove. It's so bad. says:

    I had to interview my dad for a school project because he had been alive during the Great Depression. I asked him, “Was our family hit very hard/Was it hard to live?”, and he replied, “Well, our family was dirt poor to begin with, so we didn’t even really notice there was a depression.” I’m dirt poor myself and I haven’t noticed any major changes. My finances were in a recession long before America.

    I just feel bad for those poor suckers who spent most of their lives working, putting it towards a pension, and learning it may go POOF.

  11. tankertodd says:

    The article contradicts itself. First it says we’re going to be in a BAD recession but then cites that we’re not technically IN a recession. Also remember that oil is seriously down and our dollar is up. Also remember that the market has baked in the expectation that Obama will get elected, and so stock prices are depressed (the market expects capital gains taxes to increase, thus decreasing the expected market return).

    As for credit card losses, the banks are VERY aware of these losses and have baked them into their plans. The market has also baked these losses into the stock prices.

    • Techguy1138 says:

      @tankertodd: The rising dollar is very bad.
      We need a weak dollar to spur US employment and production. A rising dollar means it is cost effective to create jobs in other countries.

      Crisis or not the US sure could use some economic stimulus in terms of job creation.

  12. zentec says:

    For most middle-class Americans who live within their means, the recession arrived long ago. Stagnant wage growth, higher prices for everything and fewer opportunities for better jobs, they’ve cut back and are living sensibly.

  13. Pylon83 says:

    Funny thing is people still have enough cash to gamble.


    • frodo_35 says:

      I put my stimulus check on bills. I live within my means and am ok not much debt,but I am concerned for my children that are just starting out. This could last a good 5 years or more. Even with the 700 bil bail out we are in for rough times. If the markets recover it will just be even worse later as we cannot stave off the piper forever. Ship out jobs, cut wages,raise the prices of housing and energy. The breaking point is here how long will this bailout chewed gum keep the dyke from bursting.

  14. Peabdog says:

    “GDP fell .3% in the 3rd quarter of 2008, compared to 2.8% gain in the second quarter.”

    The .3% is an annualized rate. The GDP shrank by .075% last quarter.

  15. pecan 3.14159265 says:

    The biggest sign of a responsible citizen is the ability to adapt to situations. Yes, the recession is here or is coming, depending on your view. No, it won’t end for some time. BUT, if you’ve been living within your means, this just means you can shift the way you spend a little (not buying organic milk, only buying organic milk when you have a coupon, cutting back on going out to eat, etc.) but not eliminating entirely. To the people who weren’t living responsibly, they’re scrambling to adapt, which they probably don’t know how to do.

    Or who were on the bottom of the paycheck scale to begin with, they’re even worse off because they don’t have any fat to trim, and they just have to deal with it as it is.

  16. altryan says:

    Blah Blah Blah… I’ve never provided for myself through a recession before. This is my first one and I’m looking forward to it, that way when I am old and senile I can tell my grandkids that they never had to live through what I did in a smug yet loving way.

  17. quagmire0 says:

    If I know one thing, it’s not to listen to the press – at all. They have no friggin’ idea what is going on and constantly say we ‘are on the virge of an economic collapse’. Meanwhile, the market goes up, unemployment and GDP are still reasonable and most people are still living comfortably.

  18. kwsventures says:

    The current economic figures are nothing like the 1930s depression. Of course, the calamity news media says otherwise.

  19. gStein_*|bringing starpipe back|* says:

    sorry, the picture is making me do this…
    We’re whalers on the moon
    We carry a harpoon
    but there ain’t no whales
    so we tell tall tales
    and sing this whaling tune…

  20. gibbersome says:

    I haven’t really lived frugally: I traveled alot, purchased an expensive laptop, spent money eating out at least 2-3 times a week, stayed at 3-4 star hotels (yay priceline) and I’m doing okay…meh, it pays to be unmarried and childless I suppose.

    The key is not to just live frugally, but to try to cut down on things you can do without. I share a nice apartment with a roommate, I pay off CC debt and love to collect rewards, I don’t watch TV, but use the internet to fulfill all my in-home entertainment, and I’m subscribed to a cheap AT&T cell phone plan from 4 years ago. If I didn’t have a girlfriend, I’d be rich! :(

  21. fuzzymuffins says:

    what really sucks is that our government CAN’T afford WPA’s or assistance on this recession.

    bush and Co PISSED a trillion for a useless war, billions to banks… the surplus of 10 years ago is GONE.