The standard definition of a recession is when the gross domestic product (GDP) sinks for two consecutive quarters. The additional three months is an economist’s dispensation to initial contraction. Even for politicians and presidential appointees that should be easy enough to understand. Never mind that in the convenient colloquialism too-often applied, controversy constantly confounds.

There are none so blind as those who refuse to see. The ignorance of some and the alienation of armchair commentators underlie not only the question of inevitable recession but also on recovery measures once infected.

In an economy short of confidence and credibility little can substitute for the analysis of such agencies as Moody’s, Standard and Poor’s or the IMF – World Bank who measure, not simply two quarters of contraction, but aggregate supply and demand, measuring the elasticity of prices to resurrect an economy from economic shocks.

Additive price burdens provide the friction that prevents prices from stimulating demand. The effect on overall prices by the government’s refusal to grant tax breaks, the Finance Department’s adherence to perpetuating predatory E-Vat, aberrant royalties, our vulnerability to high tariff multipliers and the propensity to cook up ludicrous taxes to sustain an expensive bureaucracy damages what recession resiliency we might have.

To analyze the recession that we constantly deny, we will use the official data from the National Statistical Coordinating Board.

Seasonally adjusted GDP fell by 2.3%, the lowest since emerging from the dictatorship years. That’s a contraction. At constant prices, first quarter GDP registered a gossamer-thin 0.4% growth down from 3.9%.

Unfortunately, the reporting lag from agriculture, fisheries and forestry where a 2.1% growth was posted is slowest. Worse, because this sector accounts for 19.4% of total domestic production, when seasonally adjusted, this sector actually contracted by 1.0% with the declines in “other crops”, corn and sugarcane.

Our fallback services sector registered 1.4% growth, a decline of 2.1%. As services account for 49.8% of GDP, the writing on the wall cannot be ignored. When seasonally adjusted, services had grown less than 1.0% in each of the last five quarters.

Our industrial sector, which includes construction and accounts for 30.5% of GDP, fell by 2.1%. Sycophants and their publicity agents who spin that catch-up infrastructure spending will result in GDP growth might do well to note the arithmetic.

Gloria Arroyo’s deficit is ballooning. She says the economic resiliency program (ERP) will be aggressive this second quarter. What ERP is that? Her numbers show a deepening deficit with infrastructure spending anemic and less than 20% of total government spending.

Moreover, total construction accounts for less than 2% of GDP. No amount of Genesis-like creation can swell those enough to make a difference. Even government consumption spending at merely 6% of GDP is ineffectual as Arroyo’s deficit forces us into expensive debts and bonds, too late to forestall a recession.

Given declining export revenues, a significant contributor to GDP, the second-quarter increase in petroleum prices, an across-the-board price multiplier that keeps prices high, and the spending dampeners from seasonally mediocre mid-year remittances and increasing unemployment, the seasonally adjusted data show recession is here.

Our GDP crash may not reflect the deterioration in the quality of life. But it forebodes fire and brimstone when it goes from a high of 6.1% growth the government boasted in its initial budget assumptions to a minus 0.5% calculated by rating agencies and creditors awakened by reality. Note that per capita GDP declined by as much as 1.5% where the per capita output in strife-torn Angola is now twice the Philippine’s.

In a recession, aggregate demand falls while overall price levels, slow to react when afflicted with additives, remain high. Growth reverses into recession due to the inverse relationship between price levels and aggregate demand where, at high prices, people would rather buy at low output levels.

Remember what damages resiliency? It is price adjustments that will deliver us from a recession.

For now, recession is fait accompli. Unfortunately high prices tend to make recession linger. To shorten the period to recovery, government must revise policies that squeeze blood from stone. It does not do that by refusing tax breaks, or the perpetuation of predatory taxes and aberrant royalties on economic multipliers like energy tariffs; or the inanity of additional consumer taxes to sustain an expensive bureaucracy or fatten campaign coffers.

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