Free Markets, Free People
That’s what the National Bureau of Economic Research (NBER), our official arbiter of when we’re in a recession and when we aren’t, says the recession ended.
The Business Cycle Dating Committee of the National Bureau of Economic Research met yesterday by conference call. At its meeting, the committee determined that 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.
So all those who essentially said leave it alone and the economy will pull itself out of the recession were correct. Remember, June of 2009 was approximately 6 months after the administration took office and 5 months after the stimulus package had been approved by Congress. Or said another way, well before any of the money it has squandered had yet been dumped into the economy.
Also note the beginning date. The recession began in December of 2007. By the time the Obama administration got to it, it had pretty much bottomed out and was beginning to recover. The stimulus plan was signed into law on Feb. 17, 2009. The recession officially ended in June of 2009 per NBER. That’s not to say, however, that “things are better” necessarily:
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. Rather, the committee determined only that the recession ended and a recovery began in that month. A recession is a period of falling economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. The trough marks the end of the declining phase and the start of the rising phase of the business cycle. Economic activity is typically below normal in the early stages of an expansion, and it sometimes remains so well into the expansion.
Or, an easier way to say it is that we experienced and are experiencing now what is normal to experience in a recession, but, as usual, the business cycle turns and we begin an expansion. Note the last line – “Economic activity is typically below normal in the early stages of an expansion, and it sometimes remains so well into the expansion.”
So again, I stress, any claim that the “stimulus” was the reason for our beginning to recover has a bunch of inconvenient determinations by NBER to overcome. And anyone who thinks the government can get out of its way in approximately 4 months time to have any real effect (mid Feb to June) on the economy – regardless of the size of the spending it has planned to inject – simply doesn’t have a clear understanding of how this government operates.
That said, I hope NBER is correct and that we are indeed expanding. As it stands now, though, most of the unemployed out there looking for scarce jobs most likely don’t give a rip what NBER says. Until they’re again employed, they’re still suffering from a recession. And that doesn’t bode well for Democrats at all in November.
Some indicators are looking better, but others, not as good:
While the U.S. economy is showing signs of stabilizing from a recession that started in December 2007, it’s “way too early” to say the contraction is over, said the head of the group that officially makes the call.
Gross domestic product estimated on a monthly basis “had a trough earlier this year, but it is way too early to say that it is a true trough rather than a pause in a longer decline,” said Robert Hall, who heads the National Bureau of Economic Research’s Business Cycle Dating Committee.
So while you continue to hear the happy talk about economic recovery, the experts aren’t yet ready to say whether we’ve bottomed out or are just taking a breather in the midst of a longer decline.