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Perhaps Jon Stewart Needs To Keep Nouriel Roubini In That Closet Again, Recession Edition…

September 28th, 2010 · 15 Comments
Econ 101 · Macroeconomics

I love you, Jon Stewart. If you were not already spoken for, I would very much like to have lots of adorably funny Jew babies with you and all that. Furthermore, I very much appreciate that you try to bring intelligent topics to an audience that likely would not embrace them otherwise, and I particularly like when you keep economists around to help with your analysis.

As such, I am more than a little disappointed that you decided to pull the trite “pretend to fall asleep when talking about economics” gag in order to get a cheap laugh. If nothing else, Bill Maher already did a similar bit on his show back in April:

It’s not enough to make me stop watching, but don’t think for a second that I don’t notice. And no, it doesn’t count as a conspiracy if you’re the one refusing to learn, and if I were his broker I would probably at least consider taking advantage of his willful ignorance as well. πŸ™‚

Anyway…Jon Stewart seems a little perplexed regarding how economists can say that the recession is over:


The Daily Show With Jon Stewart Mon – Thurs 11p / 10c
The Recession Is Over
www.thedailyshow.com
Daily Show Full Episodes Political Humor Tea Party

In a lot of ways, Stewart is correct- the National Bureau of Economic Research is the organization that officially decides whether the country is in a recession or not. (Fun fact: it’s also located about a block and a half from where I live. Coincidence?) If you look at the NBER’s site, you will also see right there on the front page that it claims that the recession ended in June 2009. I’m also pretty sure that the NBER’s methods are not so much subject to, um, “partisan chit-chat.” (If nothing else, practically nothing that economists engage in even comes close to any definition of chit-chat.) In fact, the NBER is more than happy to explain how it does what it does in it’s Business Cycle Dating Procedure: Frequently Asked Questions. Nerdy? Absolutely. Partisan chit-chat? Probably not.

The important thing to remember, however, is that a recession is, according to the last textbook I reviewed (yes, that is one of my jobs), “a period of significant decline in output employment.” A recession is NOT “whenever things are crappy from an economic perspective.” This can be made more clear with a graphic pilfered from the aforementioned textbook:

Hopefully it’s a bit more clear now that being out of a recession doesn’t mean that everything is back to normal, it just means that things are no longer getting worse. So yeah, maybe the economy still sucks, but at least it will probably suck less tomorrow. See how that works?

The textbook also gives a historical record of recessions and their durations- it’s interesting to note that even when the NBER counts the recessions as being over in July 2009, the latest recession was among the longest in recent history.

Tags: Econ 101 · Macroeconomics

15 responses so far ↓

  • 1 Marie // Sep 28, 2010 at 7:59 pm

    I think that most of your comments should actually be directed at Megan Kelly’s clip that Jon showed on his show. I think most of what Jon was saying is actually true. Although, he clearly has not experienced a wonderful economics lecture which is why he thinks he should fall asleep while discussing economics. πŸ™‚

  • 2 Mo-ha-med // Sep 28, 2010 at 8:00 pm

    Good one… Sharing that.
    Perhaps the main problem – and why the issue can be used for laughs – is one of definitions really.

    The ‘recovery’ period, if I understand correctly, is the one during which the recession is overcome – and we’re back on trend – but it would be silly to announce the ‘end of the recovery’ as something to celebrate..

    We need a name for the ‘recession+recovery’ period then. Preferably something that sounds scary so we can celebrate its end!

  • 3 Jeff M. // Sep 28, 2010 at 8:38 pm

    What happened to the two quarters of negative growth (GDP) definition?

  • 4 econgirl // Sep 28, 2010 at 8:38 pm

    @ Marie: Right- my annoyance is directed mainly at the falling asleep schtick and (to a lesser degree) the noisemaker thing.

  • 5 berriewine // Sep 28, 2010 at 8:39 pm

    I was trying to explain this to my sister last week. You did a much better job.

  • 6 John // Sep 28, 2010 at 9:29 pm

    I had a reporter in tampa pull that *#$! once. He called to ask for an economist to explain how federal spending is allocated. Once the interview was done he asked the camera man to get some shots of him nodding off. Nice…

  • 7 The Recession is Over! Long Live the Recession? « A (Budding) Sociologist’s Commonplace Book // Sep 28, 2010 at 9:35 pm

    […] been over since June 2009. Woo-hoo? Jon Stewart’s take is particularly amusing, though not amusing to all economists. So, the recession is over… what does that really mean? Is unemployment shrinking at a […]

  • 8 Tony // Sep 28, 2010 at 10:20 pm

    I couldn’t help bringing this one up…

    “Business Cycle Dating Procedure: Frequently Asked Questions” sounds like a manual for how to go on dates during recessions and booms. Although, if it were written on *that* topic, it probably wouldn’t sell as well as “Women are from Venus, Men are from Mars.”

  • 9 econgirl // Sep 28, 2010 at 10:49 pm

    I cannot believe that I didn’t think of that. Well played. Let’s see, I think it would go something like this:

    — If you are wealthy enough to weather a recession, then your strategy should be to try harder during booms, since that is when there’s more competition.
    — If you aren’t wealthy enough to weather a recession, then your strategy should be to try harder during a recession since you can’t rely on impressing a potential with money.
    I suppose this is relevant mainly for men perusing women. For women pursuing men, I simply refer you to the (no longer updated) Dating a Banker Anonymous site:

    http://dabagirls.wordpress.com/

  • 10 econgirl // Sep 29, 2010 at 4:00 am

    @ Jeff M.: I was puzzled by the two quarters of negative growth thing too. Luckily, it’s at least partially explained in the FAQ that I linked to above.

  • 11 Tristan T. // Sep 29, 2010 at 8:23 pm

    You got me all excited with the title. I thought you were going to talk about his Crisis Economics book. Oh well, still entertained and have a new page to show people that don’t understand the economy. (^_^)

  • 12 Tristan T. // Sep 29, 2010 at 8:24 pm

    Roubini’s book to avoid confusion

  • 13 berriewine // Sep 29, 2010 at 10:31 pm

    If all other indicators fail, the lack of Dating a Banker updates should show the recession is no more.

  • 14 Dave // Oct 1, 2010 at 7:43 pm

    Their dating of the end of the recession includes income from unemployment insurance payments. So if we give people enough money for not working, we can officially declare the recession over. Woo-hoo!

    (Leaving those transfers out, the recession is over a few months later. But I agree with you Jodi: things still do suck now and will hopefully suck less tomorrow.)

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