The Recession Is Over… Really?
Last week the National Bureau of Economic Research came out with a report saying that not only is the recession over, but that it actually ended last July. Their Business Cycle Dating Committee stated this: “a trough in business activity occurred in the U.S. economy in June 2009. The trough marks the end of the recession that began in December 2007 and the beginning of an expansion. The recession lasted 18 months, which makes it the longest of any recession since World War II. Previously the longest postwar recessions were those of 1973-75 and 1981-82, both of which lasted 16 months.”
If you’re like me, you had no idea what that meant. What is a trough, since it’s obviously not what I was thinking it was? That link will explain it better, but in essence it’s the point at which a a financial cycle either starts to go good or go bad. Sometimes it takes awhile to measure because figures can be misleading. There can be a slight upturn where someone might determine things are good and have it suddenly go backwards; the same goes for the other direction. That’s why it took so long for them to make this determination.
Is the recession really over, though? Sure, they said so, but even they add that the economy is still shaky because of the housing market and unemployment. It’s a good thing they said it because I was thinking it when I was reading the story about it being over. I have heard some of the numbers of course. I’ve questioned why the stock market has gone up when there was no real proof that things had improved, but it has gone up around 67% from its low last year. And on the news of the recession being over it made another surge, which made no sense as it was from more than a year ago. The economy has also grown, though less than 3% over the past year, so no one’s jumping up and down over those figures either.
If you’ve followed any news from major cities across the country, not one state has agreed with this assessment. Even Warren Buffett came out saying the recession can’t be over because we’re actually in a depression, which is worse than a recession. His major point is that you can’t say something is over until you reach the point you were at before the bad surge began.
I fully agree. Spending is down. Lending is down. Jobs are down. Housing is down. Retail is down. Stock market’s up in general, although it closed down 108 points Thursday, is closed up 197 points Friday. Recession over? Doesn’t feel like it.