Wednesday, September 24, 2008

Practicing Economics Without a License

I should be worried that the AP will charge me several thousand dollars for posting this bit, but here goes anyway:

"The financial markets are in quite fragile condition, and I think absent a plan they will get worse," Mr. Bernanke said.

Ominously, he added, "I believe if the credit markets are not functioning, that jobs will be lost, that our credit rate will rise, more houses will be foreclosed upon, GDP will contract, that the economy will just not be able to recover in a normal, healthy

GDP is a measure of growth, and a decline correlates with a recession.

No, actually GDP is a measure of, well, Gross Domestic Product. GDP growth would be a measure of growth. A decline in GDP doesn't just correlate with a recession, it is the definition of a recession.