Question: What is the tipping point?

Paul Krugman: Well actually it turns out that the definition of a recession is that a group of guys – the Business Cycle ... Committee – say that it’s a recession.  So in the U.S., the formal definition is not in terms of numbers, but in terms of the judgment of this committee.  But the judgment tends to be based on things like is employment actually declining – not growing sluggishly, but actually declining for a sustained period of time.  Is . . . is industrial output actually falling?  So the . . .  In many countries it turns out to be really close.  In many countries two quarters of shrinking economy is recession.  The U.S. is not that simple.  It’s more of a judgmental thing.  And that’s a hard criteria to meet.  So you can have an extended . . .  Now the U.S. economy was officially not in a recession from November 2001 until August 2003, but it sure felt like a recession to most people. And so we’ll . . . I think we may be in that kind of situation. I’d say that we’re in a . . . a . . . we’re having a near recession experience, which is enough to feel like a recession to most people.