Commonsense economics

Recently, I posted that NBER announced the recession is officially over. On a contradictory note, after NBER released the news, Warren Buffett said that the US is still in a recession.

Why made him say that? This was what he said on CNBC: “On any commonsense definition, the average American is below where he was before, or his family, in terms of real income, GDP (gross domestic product). We’re still in a recession. And we’re not gonna be out of it for awhile, but we will get out of it.”

In 2008, he was one of the first to declare a recession has begun based on the fact that most Americans were doing worse than they had before.

Just like what Warren Buffett has observed in the economy, we can also use some simple observations instead of complex data to know where the economy is headed or if it has recovered from a recession. For example, we can look at:

  • Amount of people in shopping centres and departmental stores
  • Amount spent during sale periods (eg. Great Singapore Sale, IT fairs, etc)
  • Length of taxi queues
  • How full/empty your favourite restaurants are during dinner time in the weekends
  • Level of vehicle COE premiums
  • The number of people turning up in car showrooms
  • Thickness of classifieds ads section
  • Number of tourist arrivals

In the Singapore context, we are surely out of a recession due to the very good GDP and manufacturing numbers. Also, according to the simple observations as above, I can see the shopping centres are getting more and more crowded and more jobs being posted in the classified ads section compared to 2008-2009 period. Furthermore, the number of tourists arriving in Singapore has been growing ever since and has even hit the 1 million mark!

(Reference: http://www.huffingtonpost.com/2010/09/23/warren-buffett-were-still_n_736148.html)

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