Needed (and provided): a new name for the economy

There is a category in the news daily, in which there are two alternatives, but which require three. I am referring to recession and depression.

By common consent, we are in something called a recession, and have been according to the organization deciding this, since December 2007. But it is more than a recession although, fortunately, it would appear, for the time being at least, we are not in the horror of horrors, the 1930's catastrophe, often called the Great Depression. But we are not exactly in a common recession, so we often read we’re in a recession plus. Or more frequently, we are in a Great Recession.

Actually, the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER), a private organization of esteemed economists, is by common consent the organization that decides when a recession begins and when it ends. The shorthand definition is two consecutive quarters of GDP decline. But the NBER does not behave as if it were in a strait-jacket on this, and it will say we are in a recession if enough criteria are heading South, even if two consecutive quarters are not reached–such as industrial production, personal income and sales. More formally: a recession is a "significant decline in economic activity spread across the country, lasting more than a few months, normally visible in real GDP, growth, personal income, employment, . . . industrial production and wholesale-retail sales."

Interestingly, what is key for the NBER is income, sales and production, not unemployment. Long after the NBER decides the recession is over, unemployment will likely be climbing (or at least, not declining).

So let me define a recession, somewhat differently from the usual way: a recession occurs after an expansion in which prices go up which are then countered by tight money by the Federal Reserve, which causes the economy to pull back–output falls and unemployment rises. Then, having slowed down the inflation, the Fed lowers interest rates and the economy rebounds. What makes this "recession" different is that prices did not rise very much, except, of course, housing prices, but even more important lower interest rates–the federal funds rate controlled by the Fed is barely above zero–didn’t bring the economy back.

Yet, clearly, neither the depth of the decline, nor the length of the decline makes what we have a depression in the mode of what existed in the 1930's. Clearly, bad as the situation is for many people, we are clearly not living through the Great Depression.

But don’t we need a word for what we have–other than Great before Recession? Ideally, it would be good to join the words recession and depression, but re-pression doesn’t do it (and sounds like something in Pakistan or Afghanistan); nor do any of the other introductory words, like Great, Deep, or Sustained do the trick. Slump could be a possibility, but it’s implicit in the word recession. The only alternative I can come up with is not likely to be accepted, since it isn’t English–Uber-Recession. In Latin, uber means super and in Greek it means hyper. Mostly we know the word through Friedrich Nietzsche–ubermensch. Maybe, Hyper-Recession can do the trick, but it is also unlikely.

Thus, we have a condition without a name, bordering on one side a mild but definable condition–a recession–and on the other a devastating but vaguely defined condition–a Depression.
Given that the Great Depression occurred about 75 years ago, it is time for a change. There IS an alternative. Call any decline that responds to monetary policy a recession. Call anything that does not, even when accompanied by awfully high levels of unemployment, measured in its broadest sense, as discussed by David Leonhardt in Wednesday’s New York Times (July 15th), in which five states–Oregon, Rhode Island, Michigan, South Carolina and California--all have over 20 % unemployment rates, and a downturn that also does not respond quickly to a massive stimulus–call such a decline a Depression. And call what happened in the 1930's the Great Depression.

Simplicity itself: we have something to define what happened in recent years–2001, 1990-91, 1981-2--Recession; we have something to describe what we are going through now–Depression; and something to describe the rare catastrophe (of the 1930's)–the Great Depression. (Capitals are optional.)