Last night at about 20:00 PDT, on my way to David's Coffee Place, I glanced into the Brass Rail, a San Diego night club. On a Friday night, there were no customers. That had changed by the time that I headed homeward, but it still wasn't particularly busy. Nor was it yester-day. David's Coffee Place has also been slow the last few days. Carlos, one of i baristi, suggested that this is largely an artefact of the increased price of gasoline. I think that he's correct. I also think, as I told him, that current petroleum prices are a bubble; but I don't know when the bubble will collapse, nor what will trigger the collapse.

Locally, there are various store-front locations in Hillcrest that have been vacant for months. It's an inescapable that there is some price at which someone would be willing to rent any given one of these sites; but landlords are evidently unwilling to drop rents to such levels. This refusal might seem simply unreasonable, and perhaps in some cases it truly is, but all landlords (reasonable or unreasonable, renting or refusing) are unavoidably gambling. Any who enter into an arrangement at the market-clearing price of to-day is gambling that those prices won't rise to-morrow enough to off-set revenue forgone by waiting. At the same time, those who are refusing to lower their prices are hanging tough on a theory that prices will rise in such manner, or that they'll connect with someone who'll pay their price in spite of generally prevailing prices.

I don't know what the national economy is doing right now.

Apparently, growth figures for the first quarter were revised upward; I read mention of a 0.9% annualized rate (rather than 0.6%) yester-day. This is still low — one normally expects growth of about 3%. Some respected economists are predicting that the annualized rate of growth in the second quarter will be about 0.4%, followed by 2.2% in the third quarter. Since that would suggest that we would avoid a recession altogether, I can safely predict that present efforts by pundits to redefine recession will intensify.

There has been some yammering about consumer confidence, which has dropped to levels not seen since the economic down-turn during the Presidential administration of GHW Bush. The consumer confidence measure seems to be a garbage statistic to many economists, including me. Further, it hit that previous minimum at the end of a down-turn, rather than leading a worsening of conditions. (And the down-turn in question didn't even qualify as a recession proper, as it did not last for two quarters.) If the statistic means much of anything, it doesn't mean what journalists seem to think that it means, nor what they want their readers to think that it means.

Conventional wisdom seems to be that the worst of the credit-crunch has passed. That means, however, that the Federal Reserve System will counter-act the pressure on prices creäted by the measures that it took to loosen credit; those counteractives are, unsurprisingly, things that will re-tighten credit — the hope being that a credit crunch doesn't resume. I don't think that they'll get to have their cake and eat it too; prices will rise, or the economy will go into recession, or both.

Last Friday or Saturday, my mother asked me qua economist whether we were in a recession.

I carefully explained to her that the standard formal definition of recession is two or more consecutive quarters of over-all economic contraction. So, as I explained, if I said that we were in a recession then I would be saying that it had contracted in the first quarter of 2008 and would contract in the second quarter, or that it would contract both in the second quarter and in the third quarter.

After that careful prefacing, I told her that I thought that we were in a recession, but that this had to be seen as a guess.

Well, the data have since been reported for the first quarter of 2007, and apparently the economy did not contract, though its annualized growth rate was a sad .6%. My guess is in danger of being falsified, if the growth rate manages to stay at-or-above zero in the present quarter, or if things pull back above zero in the next quarter. Unsurprisingly, I'd be pleased if the data proved me wrong.

In that first quarter, there were those who were mocked for refusing to concede that the economy was in recession. The data demonstrate that it was wrong to mock them. Not that any apologies will be made by those who did the mocking, or even that they will be held to task by other commentators in their circles.

Mind you that a small decline wouldn't have legitimized the mocking. What is wrong, first and foremost, is too much certitude. And then that wrong is compounded by attacking those who are duly cautious.