Stop the Presses! Change the Definition.

 

For years it has been understood commonly that the definition of a recession was a period of two or more consecutive quarters of decline in a nation’s gross domestic product. By that definition the United States is now in a recession after declines in the first and second quarters of this year. That is simple and easy to understand, but it also is politically inconvenient for the Democrats. So Morningstar and some others in the financial media have given us articles declaring that in the last couple of of days the definition has become inoperative, and thus there is no recession at all. (The implicit new definition seems to be a period of two or more consecutive quarters of decline in the gross domestic product unless there is a Democrat in the White House.)

Morningstar once was a respectable, politically neutral financial site. Others in the financial media have tried sometimes to give the impression that they were the same. With this they not only are making it clear that they have become public relations agents for the Democrats, but also are insulting their audiences’ intelligence. Clever party hacks could have said something such as “the country is barely in a recession, but this one may be mild and lack some of the characteristics of other recessions”, but they didn’t. By expecting to get away with something so obvious as changing the definition just before the news came out, they effectively are announcing they think their readers are credulous fools and morons. That may not pay off. Most investors I know are fairly smart.