<< I think the point is that we are only at the beggining of this slowdown. A lot of people have lost and will continue to lose thier jobs in the next two quarters. Clinging to the text definition may make the layoff a lot harder to prepair for.
People who put their faith in "definitions", while ignoring reality, are usually those who suffer the most because they refuse to prepare. >>
text book defination of 2 consecutive quarters of negative growth is used to confirm the fact that we HAVE BEEN in recession during those 2 quarters and doen not mean that we are in recession from now on. And as such it is useless in preparing people for recession.
To prepare people for recession economist use Leading indicators but unfortunately most leading indicators send conflicting and vague signals thus the dificulty of predicting whether we are in a mere slow down or a full fledged recession.
Employment is one leading indicator (as uneployment impacts the biggest of 4 components of GDP - consumption)and massive layoffs announcement precede increase in unemployment (obviously). So news of layoffs and higher unemployment should lead us to believe that we are already in recession (a fact that could be confirmed by negative GDP growth in 2nd and 3rd Qtr of 2001). But a note of caution here, that unemployment is rising from historically low levels so it may be that low unemployment levels of last couple of years were simply unsustainable over long term.
On the other hand Greenspan has been chopping rates like anything to primarily (its also serves to stimulate consumption and exports) to stimulate another important component of GDP - Investment. Whether this approach will succeed in heading off negative GDP growth for the next two quarters is anybody's guess.
Akaz