Recession is something that we all seem to know. But when one start throwing in words like macroeconomic indicators, GDP, consumer spending, inflation – the whole concept becomes difficult to understand. Even the book definition is still somewhat difficult to comprehend to a non-economist.

They say that “two successive quarters of negative growth mark the beginning of a recession and two successive quarters of positive growth mark the start of an expansion.”

And so I woke up this morning with a lot of good news on TV and on the internet. Everyone’s blaring the good news that the worst recession is over.

How much did the GDP this quarter grew?

Well, they said that the economy was up 3.5% from July to September. They were saying that the government stimulus worked. They bailed out a number of banks, supported spending on cars and the purchase of new homes through tax credits. In fact, those tax credits for new home buyers will end this November. Then, you have rebates for auto purchases. And if you opt for those green cars, more green bucks through tax credits. In fact, jobless claims dropped. Its all good news. You don’t see any panic in America. Malls are still crowded. So, there’s your consumer spending.

But how do they determine that the economy is getting better? Well, one metric of course is the stock market. Most people believe that the stock market performance will show you how good the economy is. When you have some strong positive sentiment on the market or consumer confidence, investors starts pouring in some money again, people start spending and investing. Once the economy gets better though, typically oil prices goes up because of the surge in demand. Now, if oil prices go up too high, then you’d have some problems again.

I like what President Obama said:

“The benchmark I use to measure the strength of our economy is not just whether our GDP is growing, but whether we are creating jobs, whether families are having an easier time paying their bills, whether our businesses are hiring and doing well,” Obama said. Source: Economy growing but recovery could be at risk

And so that was the conversation I had with Rob today.

Reynz: Oi! Tapos na daw ang recession! GDP is up. Jobless claims are down. Rejoice na tayo!

Rob: Juice ko! Anong i-re-rejoice naten. They have to bring those jobs back to America dahil they have been outsourced kung saan-saan.

Which is true. GDP numbers are just that. Numbers. They’re of no good if those numbers could not be translated into employment. But how could it be translated into employment when jobs and factories are no longer in America. Like what Rob said, they’ve been outsourced! Of course there’s a slew of reasons why they were outsourced. The bottom line was? To increase the bottom line!

In America kasi, we wait and watch for consumer spending. We are a consumerist society, after all. Our economy is based on consumerism. We want people to spend under the belief that more consumer spending, the more product demand, factories becomes busy, production cranks out, the economy becomes vibrant again.

And if it goes back to where it was before, you still have to deal with trade unions. Like those in Detroit? They were not much of a help, literally dragged Detroit cars balance sheet to the ground.

I’m not against unions and I believe they served a purpose in controlling workers exploitation in America especially when manufacturing was only starting. I just feel that they’ve outlived their purpose. Besides in a market economy of ups and downs, unions seemed to only typically understand that their profit sharing must only go up and never down.

And while the media trumpets that jobless claims dropped, unemployment in America is actually still rising and although I’m still doubtful if this good news will really stick, I still hope America finds its way back economically.

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