Whether Wither

   The current economy is beginning to seem like Mark Twain's weather comment: Everybody talks about it, but nobody does anything about it.
   Now the question becomes whether anybody can do anything about it, or will the economy simply wither on its own.
   An ultraconservative school of economic thought says that an economy has a life of its own and that government neither can nor should do anything to influence it. That idea, however, lost most of its influence during the Roosevelt era, when government intervention rescued the nation from the Great Depression.
   The more liberal attitude prevailed for many years, even as cycles occasionally raised questions about its validity.
   Perhaps both are correct. Every economy has cycles, and when things are going well, government should minimize its intervention. This is true even as government spending always has a major role in any economy.
   But when an economy goes into its downward cycle, government can and should increase its spending to compensate for cutbacks in consumer and business spending.
   News reports currently stress the possibility of a recession, as predicted by what's called an "inverted yield curve." And while it's true that such a phenomenon has predicted nearly every economic downturn for many years, no one has yet calculated the time frame between the worrisome yield curve and the actual start of a recession.
   So just what is an "inverted yield curve, and why is it significant?
   Start by plotting the interest rate yield on bonds. Typically, the longer you hold a bond, the higher the interest rate. Short term bonds pay a lower rate. When plotted on a graph showing the two factors, the line will start at a lower point and rise over time. Visually, the line starts on the left and rises to the right.
   But when investors fear to lock in their money for a longer term and buy short term bonds instead, the yield curve is inverted -- slanting in the opposite direction, downward from left to right.
   Historically, this fear of investors to lock in their money for a long term has been a harbinger of recession. But the time frame, however, from the start of the downward curve to an economic downturn, has not been fixed.
   In any case, a recession is defined as two consecutive fiscal quarters of negative growth in an economy. And since the U.S. has yet to see a negative growth rate in a recent quarter, we won't see a recession until next year, according to the standard definition.
   That means, even if the current fiscal quarter, which ends in September, shows negative growth and is followed by negative growth in Gross Domestic Product (GDP) in the fourth quarter ending in December, we won't know until the numbers are posted sometime in January whether the U.S. has shown two consecutive quarters of negative GDP growth, thus meeting the definition of recession.
   Meanwhile, holiday spending as the year ends is likely to stall a fourth quarter negative.
   Maybe.