Crash

Recently I’ve been finding all I’ve learned about economics turned on its head. As someone recently graduated from a university undergraduate program, I am not too far removed from economic abstraction. How economics should work, an ideal if you will.  Real world effects either confirm or confuse what’s been learned in the classroom. One such effect is to see how two accepted economic models react to a recession. On one side, we have the microeconomic model of the firm and it’s pathway to success, and on the other, the macroeconomic model of growth of a domestic economy. I accepted both of these models from lesson one. Now I see how one can work against another.

A new recession?

I just got my monthly update from the Bureau of Economic Analysis on the GDP. Apparently, growth is still positive (0.9%). This means that we still are technically not in a recession, and my guess is that we won’t be, barring some unknown shock. The worst of the housing crisis is over, despite the Case-Shiller housing index indicating still-falling home prices. Although these prices are still falling, this is a long overdue correction. Home prices are falling slower now, which indicates a near-bottom. If housing prices at this point haven’t caused negative growth, I’m not sure what will. With the world as global as it is, one must ask: is this piddly growth the new recession?