The United States is in an economic recession.
So believes Sen. Bob Bennett, who dares now to use the "R" word.
Bennett, R-Utah, sits on several Senate banking and economic committees — the ones before which Federal Reserve Chairman Alan Greenspan regularly testifies. Greenspan has not said the economy is in recession.
That's because, technically, a recession is two straight quarters with negative economic growth, Bennett told the Deseret News editorial board Tuesday. And while that has not happened yet, Bennett believes it may well over the next two quarters.
"We've gone from almost 6 percent annual economic growth (in the gross domestic product) to 1 percent. It is not negative growth, so economists wouldn't define it as a recession. But it sure feels like one.
"If we had normal 4 percent growth and went down to negative 1 percent — that's defined as a recession."
The U.S. economy has dropped that drastically, it's just not in negative territory yet, said Bennett, who sits on the banking, economic policy, financial institution and other committees that watch America's economy. "If you looked at a curve of how economic growth has fallen, it would look just as bad" today whether the economy was in the negative column or not.
"The Wall Street economists whose opinions I value say we should recover, be out of recession, after the fourth quarter" of the current year — the end of 2001, he said. Other, "more pessimistic economists" don't think the U.S. economy will recover until the second or third quarters of 2002 or the fall of next year.
"We could be in recession five straight quarters," and under recent economic history that would be a severe downturn, Bennett said.
If the economy does bounce back after two bad quarters, it's because of the tax cut President Bush and Congress just gave, Bennett said.
Those $300-to-$600 checks start going out next week, he said. And even for those who, for whatever reason, don't get federal income tax rebate checks this summer and fall, the tax cut also drops people's federal tax withholding.
And you'll see that amount — small as it may be — in your next paycheck, Bennett said.
The rebate checks combined with the smaller withholding "will give people the psychological boost" needed to keep consumer spending going strong.
"The only two sectors of the economy, really, that are keeping us going are housing and consumer spending."
If Americans start to feel jumpy — don't spend as they are accustomed to — then the spiral of recession is likely, he added.
But the good news of the rebate checks and lower withholding rates should, he hopes, keep people writing checks and using credit cards.
"The U.S. has the largest economy in the world, followed by Japan and Europe. Usually, when the U.S. slips into recession, Japan and Europe" remain economically strong enough to lessen the U.S. downturn.
"But Japan is in real trouble." It appears Japan is slipping, once again, into recession. Europe is not strong economically, either, Bennett said.
"These are difficult times. Can we slip into (recession) for two quarters and then get out quickly?" That remains to be seen, he said.
Ironically, Bennett said, some are saying that the federal government's hard work on Y2K — an effort headed up by Bennett himself — is one reason for an economic downturn now.
Bennett and others in his effort "got the nation's business peoples' attention" about the possible problems in the high-tech, computer-driven world when calendars changed from 1999 to 2000.
Across the nation, Bennett said, large corporations decided it was just too tough to reprogram software and just "junked their systems and bought all new stuff" that was Y2K compliant. "We got the attention of the CEOs, the IT guys tell me. And they spent like never before."
The buying sprees drove the already hot U.S. economy in 1998 and 1999. But it also meant that many firms didn't need to spend much money on computer hardware and software for the next two or three years.
"And the bottom fell out" of the high-tech economy, he said.