Pssst!!! The Recession Is Over… Pass It On!!
The private sector National Bureau of Economic Research, (NBER) considered the arbiter of recessions, announced Sept. 20 that it had pegged June 2009 as the end of the recession. The slowdown, which started in December 2007, was 18 months in duration setting a record as our longest recession since the Great Depression. Although the recession was officially determined to be over most Americans are having trouble accepting the fact that an economy that maintains a nearly 10 percent unemployment rate is in recovery. Everyone knows someone who has lost their job and is struggling in this recession. In fact, the Census Bureau announced that 1 in 7 Americans is now living in poverty, the highest number in the half-century that the government has kept such statistics.
Previously, the longest postwar recessions were those of 1973-75 and 1981-82, both of which lasted 16 months. Although the recession officially ended 15 months ago, it doesn’t mean that the economy is healthy, the NBER asserted. “Economic activity is typically below normal in the early stages of an expansion, and it sometimes remains so well into the expansion,” the NBER said. That would pretty clearly be the case at present. But normally the economy comes roaring back when the expansion begins as a natural phenomenon of the pent-up demand that the recession has created. Unfortunately, the GDP remains at anemic rates 15 months into this recovery.
The news doesn’t get any better since there appears to be no end in sight for unemployment in the 9 to 10 percent range. In order to just keep unemployment where it is now – hovering around a painful 9.6 percent – economists say the economy needs to grow at an annual rate of about 2.5 percent. The rate for the second quarter was only 1.6 percent, and the predictions for the third quarter aren’t much better. If those numbers hold steady, unemployment may actually go up. No one believes that it will go down any time soon.
How to re-fire that demand which will ignite the economy is maybe our biggest challenge. With so much of the middle class and the rest of working America tapped out, there is not enough consumer demand for the goods and services that the U.S. economy is capable of producing. Without that demand, the prospects for a robust recovery are greatly diminished.
While, technically, the economy might have come out of this latest recession in June 2009, it just doesn’t feel that way to most Americans.
Question Of The Week
Is the United States really out of our most recent recession or is the announcement by the NBER simply another example of government “feel good” spin and propaganda?