Editore"s Note
Tilting at Windmills

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September 20, 2010

THE RECESSION'S OVER?.... It's hard to take much solace from an "official" end to the recession when growth and job creation remain so weak, but the officials who serve as arbiters this morning made their announcement.

The recession officially ended in June 2009, according to the Business Cycle Dating Committee of the National Bureau of Economic Research, the official arbiter of such dates.

As many economists had expected, this official end date makes the most recent downturn the longest since World War II. This recent recession, having begun in December 2007, lasted 18 months. Until now the longest postwar recessions were those of 1973-5 and 1981-2, which each lasted 16 months.

Recession and expansion dates are based on various economic indicators, including gross domestic product, income, employment, industrial production and wholesale-retail sales. The Business Cycle Dating Committee typically waits to declare that the economy has turned until well after the fact, when it has a longer track record of economic data to confirm a new trend.

The NEBR added that while the recession ended in June '09, that doesn't mean economic health in July '09 -- the "official" end marks the point at which the economy began to turn around.

"In determining that a trough occurred in June 2009, the committee did not conclude that economic conditions since that month have been favorable or that the economy has returned to operating at normal capacity," the bureau said. "Rather, the committee determined only that the recession ended and a recovery began in that month."

I don't imagine many folks will be especially excited by the announcement -- indeed, much of the country likely perceives the recession as ongoing -- but when it comes to official measurements, I suppose it's at least somewhat encouraging to know the modest, slow recovery began about six months after the Recovery Act started pumping capital into the economy.

As for the debate over tax rates, the argument that we can't allow higher rates* to return for the wealthy in "the middle of a recession" is wrong for a variety of reasons, not the least of which is that this isn't "the middle of a recession."

* fixed

Steve Benen 11:25 AM Permalink | Trackbacks | Comments (12)

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NBER's motto, along the lines of John Blutarsky, ought to be: "It ain't over until we say it's over!"

Posted by: low-tech cyclist on September 20, 2010 at 11:37 AM | PERMALINK

This just goes to show how deep the disconnect between Wall St. and Main St. is...on Main St., nobody would even think of saying that the recession is over, irrespective of what the statistics say.

Maybe it's over for Wall St., since the more people corporations lay off, the higher their profits get, but it sure as heck ain't over on Main St., where are the people who have been laid off are hagning out!

Posted by: mfw13 on September 20, 2010 at 11:47 AM | PERMALINK

Middle of a recession or middle of Middle Earth, preserving the tax cuts for the rich can have any mythical amd ever-changing rationale. The only things that matter to the Repubs are making sure they continue to keep theirs and to get more of yours.

Posted by: GringoNoraca on September 20, 2010 at 11:47 AM | PERMALINK

Sure. But it is a statistical recovery, not a real one that most people can feel. And even in terms of statistics, this "recovery" is one of the weakest on record.

Coming on the heels of several years of weak job growth and dicey economic conditions BEFORE the recession started, this all just feels like one big blended recession ... since about late 2006 or so.

Posted by: Bokonon on September 20, 2010 at 11:51 AM | PERMALINK

This will be a worse version of the 2002 'recovery'.

Corporate profits will go up and the stock market will do awesome (much like the zero years). But the few jobs that will be created over the next few years (and it will be painfully few) will pay LESS money than the jobs that were lost. And with the loss of homes as fake piggy banks people will not be able to borrow their way to a false since of prosperity.

Absent some kind of structural change in the US economy real wages/income for over 90% of the population will continue their steady decline. Along with that we'll see a massive rollback of worker protections, erosion of benefit packages and the extension of the police state into the workplace.

Basically the descent of the United States into 3rd world status will continue unabated.

Posted by: thorin-1 on September 20, 2010 at 12:03 PM | PERMALINK

Ok, so we know when we hit bottom, but we still haven't come up for air.

Posted by: martin on September 20, 2010 at 12:16 PM | PERMALINK

Well, I guess the first recession has to end at some point so we can have our "double dip."


Posted by: bdop4 on September 20, 2010 at 12:59 PM | PERMALINK

Well, so-so-better but oil prices (and analogous etc!) from creeping Peaking serve as a long-term threat and drag ...

Posted by: neil b on September 20, 2010 at 1:40 PM | PERMALINK

Although NBER has officialy declared that the Recession has ended, its hard to believe the way Obama has reacted to the same... Obama was expected to say this with sheer happiness taking credit on his shoulders but he didnt... I somehow wonder why did he react in this manner??

Posted by: IFRS on September 20, 2010 at 2:48 PM | PERMALINK

Make that four months, not six.

Posted by: Suzii on September 20, 2010 at 3:06 PM | PERMALINK

The reason for this is very simple: "recession" in NBER-speak simply does not mean what it does in the language spoken by the other 300 million or so of us. If you look at all of NBER's definitions, it's only a recession as long as things keep getting worse. Once things stopping getting worse, the recession is over and the recovery has begun, no matter how bad things are. So this recession was over last summer, and the Great Depression was over about 1935.

It's a definition that makes sense for very limited academic purposes, but when it gets used outside that context it's like saying a trauma victim in the ICU is OK once they stop losing blood.

A better definition would by something like getting back to previous levels of employment and GDP per capital, but nah.

Posted by: paul on September 20, 2010 at 3:52 PM | PERMALINK

Watch what happens when the October ISM prints: nyeaaum-MPHFFF. Dems had better be very careful not to take credit for recovery.

Posted by: M on September 20, 2010 at 4:55 PM | PERMALINK



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