Why Aren't We in a Recession?

Andrew Samwick muses:

The Fixed Investment Picture | Capital Gains and Games: That we are not in a recession, based on weak GDP growth and a host of other macroeconomic indicators that have been flat since last summer, is quite remarkable.  Here's the path of quarterly investment as a share of GWeDP:

Note that the fall in residential investment has been just as large and even steeper than the decline in equipment and software investment that was the driver of the last recession. Equipment and software investment fell to and has hovered around the share of GDP that it was in 1993.  Residential investment has fallen to that level.  It's not clear when the fall will stop.

Well, I think that we are in a recession--or, at least, in a recessionary-like period. The great moderation continues, and I tend to attribute it more and more to swift response to shocks than to a diminished amplitude of shocks. In any time before 1985, I think, such a shock would have produced not doubt, confusion, and uncertainty but rather certainty that we were in a substantial recession.

Comments

[rea]

Perhaps no recession, but certainly a lot of recession-related program activities . . .

[Robert Waldmann]

The blue curve (equipment and software) looks a lot like an Elephant to me.
The great curve (residential investment) looks like a galloping donkey.

I do not make predictions about Presidential elections.

(oh and the orange curve looks like a fascist octopus singing its swan song)

[Robert Waldmann]

The blue curve (equipment and software) looks a lot like an Elephant to me.
The great curve (residential investment) looks like a galloping donkey.

I do not make predictions about Presidential elections.

(oh and the orange curve looks like a fascist octopus singing its swan song)

[Kevin Carson]

We'd probably have been in negative growth for several quarters now if the official inflation index wasn't deliberately crafted to understate the real rate of inflation by excluding food, fuel, and other "volatile" commodities. When you include gas and grocery prices, the average family's "basket of goods" has probably gone up at a 10% annual rate the past couple of years.

[MaryCh]

Is it possible that the runup in residential construction was partially due folks choosing to build housing rather than other structures -- look at the post-9/11 divot in the orange line. If that's so, can this part of fixed investment provide some buffer now?

(I mean, with non-residential vacancies ceteris paribus...)