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Economists: Recession is now

A downbeat report about the service sector of the economy spooked investors on Super Tuesday. Several economists say that report means we are in a recession. Super Tuesday was not so super on Wall Street, as shockingly bad economic news prompted investors to sell their stock. The Dow Jones Industrial average shed 370 points, its biggest point loss this year. The Dow, NASDAQ and S&P 500 all plunged about three percent. Service sector executives surveyed by the institute for supply management say their companies' business activity is on the decline for the first time in five years. The service sector index suffered the largest month to month drop since ISM began measuring it more than ten years ago. Service industries -- which include retail, transportation, health care, finance, real estate and construction businesses -- comprise a much larger portion of the United States' economy than manufacturing and other industries. Some economists are saying the combination of the service reading and other recent economic news -- such as Friday's government report showing a net monthly loss in jobs -- proves a recession is under way. The national bureau of economic research provides the official word about when we're truly in a recession. But the private, non-partisan organization historically hasn't declared we're in a recession until well after it's already begun.

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Only one way to gauge a recession

By definition, a recession is two consecutive QUARTERS of declining GDP. So it is far too early to be declaring that we are in a recession. I still believe that some bright young doctorate candidate should do his or her thesis on how we suddenly seem to be facing a recession just as a presidential election arrives. Oh, there's always an underlying weakness in the economy at the time, but do partisan hacks place their political goals ahead of their economic ethics, and talk up that underlying weakness into a full-blown recession? It certainly is coincidental that we had recessions just as Clinton was leaving office, the 2003 mini-recession as the 2004 campaign kicked off, and now, a recession looming just as we head toward the 2008 election. Are we talking ourselves into recession, simply to make it a key issue in the coming election? If so, it appears that the Democrats are succeeding this time around. Either way, it's important to note that investors can make money in a recession just as easily as they can during the boom times. It's a natural part of the economic cycle, and nothing to be feared.