How did the 2008 oil price spike drive us toward the current recession?
Hamilton: According to the National Bureau of Economic Research, the recession actually started back in December 2007, even though the really dramatic financial developments—like the failure of Lehman—came in September of 2008. So we were in a recession for three-quarters of a year before the really serious financial problems ever started. And if you look just at GDP growth, U.S. GDP was actually growing in real terms over those first three quarters. That’s unusual, to look at a period where GDP was growing and call it a recession. If we hadn’t had the severe downturn in the fourth quarter of ’08, the NBER might never have said we were in a recession at all. So given all that, the question becomes: What were the sectors that really were in trouble? One of the very important ones was the U.S. automobile sector, which was subtracting about 0.5 percent GDP growth at an annual rate for those first nine months. There’s no question that, for that sector at least, what was going on with oil p
