However they spin today's data, it's no Great Depression

Don't look now, but the Bureau of Economic Analysis at the U.S. Department of Commerce has revised their advance estimate upward and now estimate that the real GDP growth in the second quarter of 2008 was an above-average 3.3%.

Commentators who for one reason or another are invested in putting a negative spin on this blatantly positive news will no doubt find some way to explain away the naked fact that the economy is growing strongly.

Whatever mitigating circumstances they offer, there is no way to square this data with the conventional wisdom that the economy was entering the "worst recession since the Great Depression." Just a few months ago, the media was full of quotations to this effect, repeated so often that anyone who said otherwise was liable to be viewed as delirious.

However, we have been critical of the media's recession drumbeat since last November (see for example our posts here, here, and here). There has of course been a crisis in the financial sector, the long-term causes of which we have dealt with in posts such as this one and this one, but today's GDP number shows that the rest of the business world has generally continued to grow, and recent quarterly earnings reports tend to support that view as well.

The most important lesson from this entire episode in our view is the conviction that you should not base your investment strategy upon trying to time the economic cycles. As we have written before, doing so can cause you to try to "recession-proof" your portfolio or make other erroneous portfolio moves based on the shaky predictions of economists and media pundits. We strongly believe that the best core foundation for a long-term investment discipline is the ownership of well-run, growing businesses whose leadership you trust to make the right decisions for the various economic situations that come along.

For later posts dealing with the same topic, see also:

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