The Real Start of the Recession

[Bill Pup60]

As I read through the threads I continue to see some references to Bush "causing the recession" and "screwing up the economy." Of course, we can find any number of liberal media folk who will "verify" that.

Fortunately, I also see that many posters correct this misconception and point out that, in reality, Bush inherited the recession. However, the time frame for when it really started is usually listed as "late 2000" or even "early 2001". However, by looking back at all of the data, it's very easy to show that it really started much earlier.

Many "market analysts" use various triggers or events to try to pin down when some change is taking place. Unfortunately, the data time frames they extrapolate from is usually far too limited. That's why so many of them are wrong so much of the time.

Looking at “trends” in raw data can be very misleading. The “noise” and “chatter” can often lead to the wrong conclusions if the background time frame is not adequate. This is especially true in looking at data from the stock market. A look at a very long period of data is necessary to really tell what happened and when. So when did the recent recession really start?

I recently plotted up stock market data for the three most widely regarded market indicators, the Dow-Jones, NASDAJ, and Standard and Poor with data going all the way back to 1970 and up through 2003. Then using standard least squares curve fitting to find the slope trends, I find that:

• The DJIA shows the recession to start in late 1999-early 2000
• NASDAQ show it starting late 1999-early 2000
• Standard and Poor shows it starting early to mid 2000.

BTW.... this is all from REAL data, it's out there if anyone wants to check it out. (I have the chart plots in digital form. If anyone is interested in seeing them I can provide them.)

Bottom line is that the recession was well under way long before Bush took ofice. The bursting of the dot com bubble, along with the corporate scandal and collapses like Enron exacerbated the decline. (Of course, Clinton's 98 tax increases certainly helped the decline.) It's useful to remember that during this early Bush period, the Democrats BLOCKED and held up virtually all of Bush's appointees during the first 7 months causing the administration to start work with limited staff in key positions. Whether this caused things to get worse is debatable, but it sure didn't help things. Then, of course, 9/11 really pushed things over the cliff.

Considering all the obstacles the administration got in that first year, I think they've handled it very well. I shudder to think what would have happened under Gore. And I shudder even more to think what could happen under Kerry!!

[ST5]

Thanks for the time and effort that went into gathering the data for that post BP60. I'll let the data speak for itself.

[Bill Pup60]

Actually didn't take too long. The data and graphic software is already there from most ISP's.

I just get tired of seeing invalid conclusions being made by well meaning folks who just repeat what they read in a lot of the media.

As Scott Adams, the guy who draws Dilbert noted, "Reporters are faced with the daily choice of painstakingly researching stories or writing whatever people tell them. Both approaches pay the same."