Is the Recession Really Over? Experts Declare End in June 2009

[WhoWee]

It's official, the Great Recession ended over a year ago...in June 2009.

http://www.msnbc.msn.com/id/39269753/ns/business-eye_on_the_economy/

http://news.yahoo.com/s/ap/20100920/ap_on_bi_ge/us_end_of_recession

http://www.washingtonpost.com/wp-dyn/content/article/2010/09/20/AR2010092006355.html

http://www.washingtontimes.com/news/2010/sep/20/recession-over-for-a-year-americans-dont-feel-it/

http://www.nytimes.com/2010/04/13/business/economy/13recession.html

http://www.latimes.com/business/la-fi-recession-over-20100921,0,2428295.story

From the last,

"Reporting From Washington —
This just in: The recession ended more than a year ago — in June 2009.

That may seem perplexing, given the sour state of the economy, but the panel of experts designating when serious economic downturns begin and end typically takes a year or so to make the calls. ..."​

I hope none of the politicians are dumb enough to run on this announcement.

 

[Office_Shredder]

A recession is just defined by the economy shrinking. If every corporation shut down tomorrow and we returned to the stone age, it wouldn't be a recession because the economy would probably grow in October

 

[lisab]

I'm having uv-ajed...ah yes, I remember now...we had a mirror-image thread of this subject as the recession was starting.

I'll go look for it...

...well I can't find it but it was a loooong discussion on whether or not we were in a recession. I guess if we're now going to talk about whether or not we're *still* in a recession, it's a good sign!

 

[Ivan Seeking]

As can be seen, in Jan 2009 we hit a low of about -6.8% growth.

http://www.tradingeconomics.com/Temp/United-States-GDP-Growth-Rate-Chart-000001.png?a5eedec5-84a4-41b1-8e1c-15990b19a640
http://www.tradingeconomics.com/Economics/GDP-Growth.aspx?Symbol=USD

 

[Ivan Seeking]

Very strange, the wrong graph was showing. I updated the link and the correct one appears again.

 

[Jack21222]

That just means things stopped getting worse in June 2009. It doesn't mean things have significantly improved since then. The 9.6% US unemployment rate from June 2010 still feels like a recession, for example.

 

[russ_watters]

As can be seen, in Jan 2009 we hit a low of about -6.8% growth.

Minor correction: that's for the 4th quarter of 2008.

 

[russ_watters]

I'm having uv-ajed...ah yes, I remember now...we had a mirror-image thread of this subject as the recession was starting.

I'll go look for it...

...well I can't find it but it was a loooong discussion on whether or not we were in a recession. I guess if we're now going to talk about whether or not we're *still* in a recession, it's a good sign!

You're probably talking about me and the post is here:
https://www.physicsforums.com/showthread.php?p=1984942&highlight=nber#post1984942

I'll summarize: The closest thing to a standard definition of a recession is two consecutive quarters of negative GDP growth. The NBER historically didn't stray much from that until recently and used substantially different criteria in the last two recessions and made contradictory statements in their reasoning for the date assignments.

Admittedly, for the start of this past recession, it was difficult due to somewhat of a plateau, but at the time they made their decision, they showed one quarter of negative followed by two quarters of positive growth in the first 9 months of the recession (which they state in their press release). That said, a couple of sources I've checked recently (including Ivan's) show much different GDP growth than the NBER talks about. I can't explain the discrepancy at the moment. Perhaps they were revised recently? Those are quite large revisions, quite late, if that's the case.

For this past recession's end date, I have no quibble: they stuck closer to the more standard reasoning.

 

[lisab]

You're probably talking about me and the post is here:
https://www.physicsforums.com/showthread.php?p=1984942&highlight=nber#post1984942

I'll summarize: The closest thing to a standard definition of a recession is two consecutive quarters of negative GDP growth. The NBER historically didn't stray much from that until recently and used substantially different criteria in the last two recessions and made contradictory statements in their reasoning for the date assignments.

Admittedly, for the start of this past recession, it was difficult due to somewhat of a plateau, but at the time they made their decision, they showed one quarter of negative followed by two quarters of positive growth in the first 9 months of the recession (which they state in their press release). That said, a couple of sources I've checked recently (including Ivan's) show much different GDP growth than the NBER talks about. I can't explain the discrepancy at the moment. Perhaps they were revised recently? Those are quite large revisions, quite late, if that's the case.

For this past recession's end date, I have no quibble: they stuck closer to the more standard reasoning.

Yes, that was the thread - thanks, Russ.

 

[Ivan Seeking]

Minor correction: that's for the 4th quarter of 2008.

Yes, reported in Jan.

 

[Astronuc]

Warren Buffett: "We're still in a recession"
http://news.yahoo.com/s/nm/us_buffett_recession

NEW YORK (Reuters) – Billionaire investor Warren Buffett said the U.S. economy remains in recession, disputing this week's assessment by a leading arbiter of economic activity that the downturn ended more than a year ago.

"We're still in a recession," Buffett told CNBC television in an interview broadcast on Thursday. "We're not going to be out of it for a while, but we will get out."

I'll put my money on Buffett.

 

[Jack21222]

I'll put my money on Buffett.

I love Margaritaville!

 

[russ_watters]

Warren Buffett: "We're still in a recession"

I'll put my money on Buffett.

What I dislike about Buffett is that he makes stuff up as he goes along. Making up your own definitions of words is just not acceptable and for someone in his position is extremely irresponsible.

Sometimes I think his age is starting to get to him.

 

[Ivan Seeking]

The Dow broke 11,000 today.

 

[Argentum Vulpes]

The Dow broke 11,000 today.

Yet unemployment remains at 9.6% or 14.8 million people without a job.

http://www.bls.gov/news.release/empsit.nr0.htm"

 

[WhoWee]

The Dow broke 11,000 today.

...and now, the REST of the story...

http://www.bloomberg.com/news/2010-10-08/employers-in-u-s-cut-more-jobs-in-september-than-economists-had-estimated.html

The U.S. lost more jobs than forecast in September as local governments fired teachers and other workers in response to declining tax revenue.

Payrolls fell by 95,000 workers after a revised 57,000 decrease in August, Labor Department figures in Washington showed today. Private employers added 64,000 jobs, less than forecast. Wages and the workweek stagnated.

The dollar weakened and the Dow Jones Industrial Average closed above 11,000 as the report bolstered speculation the Federal Reserve will embark on a renewed round of large-scale asset purchases to spur growth. New York Fed President William Dudley said last week that further action is “likely to be warranted” unless the labor market improves.[edit: text size by russ_watters]

 

[Astronuc]

I'll go with Warren's assessment -

BECKY: The NBER said this week that the-- recession officially ended back in June of last year.

BUFFETT: Well, they define it differently. (Laughs.) But I-- I mean, I-- I define it-- I think we're in a recession until real per capita GDP gets back to where it was-- before. That is not the way the National Bureau of Economic Research measures it. But I will tell you that to any-- on any common sense definition, the average American is below where he was before, or his family, in terms of real income, GDP. We're still in a recession. And-- and we're not going to be out of it for awhile, but we will get out of it.

http://www.huffingtonpost.com/2010/09/23/warren-buffett-were-still_n_736148.html

Buffet is not making it up. He just has a more practical view than NBER, or the government that was in denial for long, but now can't wait to declare it over. Meanwhile, we see a lot of young folk who can't find liveable wage/salary jobs and locally we see many business closed.

Take away the $trillion or so the government has borrowed the last fiscal year, where are we? And what about record foreclosures and bankruptcies, and continuation of a chronic trade deficit.

http://www.loansandcredit.com/bankrupt-in-america-2009-bankruptcy-filings-per-state/

http://www.acainternational.org/us-bankruptcies-increased-14-percent-in-first-half-of-2010-17192.aspx

http://www.abiworld.org/AM/Template.cfm?Section=Home&TEMPLATE=/CM/ContentDisplay.cfm&CONTENTID=61613

http://consumer.abi.org/

http://www.abiworld.org/Content/NavigationMenu/NewsRoom/BankruptcyStatistics/Bankruptcy_Filings_1.htm

 

[Ivan Seeking]

The truth of the story

The private sector added about 64,000 jobs, but many public sector jobs were lost. This is your reduction in government spending at work.

Note the rise in public sector jobs under a Republican controlled government.

[URL]http://static.seekingalpha.com/uploads/2010/10/8/saupload_private_vs_public_jobs.jpg[/URL]

...employment in the private sector is growing, at an annualized rate of about 1.2–1.5% over the past six months. This is neither spectacular nor horrible; in fact, it is only a bit less than the average pace of job growth in the previous recovery.

...we now see that public sector jobs are shrinking at a significant rate (1.7% annualized since the end of last year). This spells bad news for those who are losing their jobs, but it's good news for the economy, since it means the reversal of the trend towards ever-greater government bloat that has been a drag on growth for years. It also means that state and local governments are biting the bullet and cutting costs, and that is something that simply must be done...

http://seekingalpha.com/article/229...re-growing-but-the-public-sector-is-shrinking

 

[WhoWee]

The truth of the story

The private sector added about 64,000 jobs, but many public sector jobs were lost. This is your reduction in government spending at work.

[URL]http://static.seekingalpha.com/uploads/2010/10/8/saupload_private_vs_public_jobs.jpg[/URL]http://seekingalpha.com/article/229...re-growing-but-the-public-sector-is-shrinking

Actually, this is the Stimulus Spending (2010) at work - and NOBODY is cheering.

 

[Jack21222]

Note the rise in public sector jobs under a Republican controlled government.

The effects of Republican policies led to that huge drop in 2008. Even though Democrats had control of the house and senate starting in 2007, they did not have time to screw things up that badly to cause the crash in 2008. Government policies simply don't work that quickly.

I'm not even sure I believe my first statement there, but it's as plausible as the implied "jobs grow under a Republican congress and shrink during a Democratic one."

More likely, I think both major parties were bought out by big businesses who wanted to wring the American public dry.

 

[russ_watters]

Buffet is not making it up. He just has a more practical view than NBER...

I guess you can argue he has a more practical view, but even that is debateable: a definition is what it is and if it is used correctly, there should be no problem. If the general public see expansion=good economy and recession= bad economy, then they are the ones misunderstanding the definition. If he chooses to use that definition, then he's knowingly playing into that misunderstanding.

Perhaps I stated that badly, though: it would be more correct to say that he's purposely choosing to use the wrong definition rather than say he made it up.

Meanwhile, we see a lot of young folk who can't find liveable wage/salary jobs and locally we see many business closed.

Which doesn't have anything whatsoever to do with whether we are in a recession or not.

 

[russ_watters]

The truth of the story

The private sector added about 64,000 jobs, but many public sector jobs were lost. This is your reduction in government spending at work.

Note the rise in public sector jobs under a Republican controlled government.

[URL]http://static.seekingalpha.com/uploads/2010/10/8/saupload_private_vs_public_jobs.jpg[/URL]


http://seekingalpha.com/article/229...re-growing-but-the-public-sector-is-shrinking

Just to make sure everyone sees it when you're trying to interpret what that graph means, note the difference in the two scales: Both the starting value and in the increment.

 

[Norman.Galois]

Which doesn't have anything whatsoever to do with whether we are in a recession or not.

I agree with russ waters is saying. There is a definition one must follow and to not confuse the terms.

Saying the recession ended doesn't imply people will start getting jobs. Whether we are in recession or not has no relevance to me at the moment. The most relevant thing is jobs. Typically a good economy implies jobs are available or they are not as scarce as they are now. For this reason, people have good economy implying jobs.

With the unemployment rate as high as it is and the underemployed rate, Canada and the US and potentially the rest of the world is at a high risk of re-entering into a recession. Although I doubt it, because I don't see many people losing jobs. It's pretty equal among getting and losing if I use the "data" I see around me (just generalizing although it's meaningless). Also, even looking at the numbers, although there has been job loss, over the past few months it has been relatively stable. Recovering from a recession doesn't imply every month will follow with growth.

There are good things that have happened. People have started to reduce their consumer debt, either voluntarily or involuntarily. I felt for Canadians and Americans have been careless about the consumer debt they have been holding. They have all started saving more.

http://www.benzinga.com/10/10/51520...ving-too-much-money-so-we-need-to-purposely-g

I believe a good balance of lending and spending must exist.

Also, another good thing I learned is that the US has some BALLS. They haven't been manipulating their currency that much compared to other countries (China for the worse, but also Japan and Korea). For a country to stand by its policy of a market price currency in this current economic stage is a very bold thing to do. US did the right thing here but now they are getting screwed.

Anyways, enough about that. Post ended.

 

[Astronuc]

We're in a hole and it's not clear that we've started climbing out of it. I imagine that only reason that there is growth is the fact that the government is spending more borrowed money to buy goods and services. That is unsustainable.

Nevertheless - I caught this interesting discussion.

Unemployment: Cyclical or structural?
http://marketplace.publicradio.org/display/web/2010/10/07/unemployment-is-it-cyclical-or-structural/

. . . .
They're saying this unemployment is cyclical. Now that's a fancy term for this dynamic -- the economy's weak, employees aren't hiring; if the government can stimulate the economy, the economy really starts growing, then employers will hire workers, the unemployment rate will fall. But here's the thing, Bill. There's some really respected economists, they're saying, "No, no no. Hold on. This high unemployment isn't cyclical, it's structural."

RADKE: Yeah, structural. What do they mean by that?

FARRELL: What they mean is companies have jobs, but they can't find the skilled workers they need. The workers want to work, but they don't have the skills to get the job. So think laid-off construction worker, Silicon Valley firm hiring programmers.

RADKE: So which is it, Chris -- cyclical or structural? And why is that so important?

FARRELL: Look, it's both and I mean that very seriously. On the one hand, this economy is very weak and therefore, if it starts growing, the unemployment rate will start coming down. But there's also a fundamental problem in our economy, Bill. That is we have too many poorly educated workers for the kind of jobs that are being created. But here's the other thing. I want to just add one other twist: The real worry is the longer this economy grows slowly, the more structural unemployment will become.
. . . .

 

[Jack21222]

I agree with russ waters is saying. There is a definition one must follow and to not confuse the terms.

I disagree with this statement. Arguably, the NBER disagrees with you too.

http://www.nber.org/cycles/recessions.html

In both recessions and expansions, brief reversals in economic activity may occur-a recession may include a short period of expansion followed by further decline; an expansion may include a short period of contraction followed by further growth. The Committee applies its judgment based on the above definitions of recessions and expansions and has no fixed rule to determine whether a contraction is only a short interruption of an expansion, or an expansion is only a short interruption of a contraction.

The Committee does not have a fixed definition of economic activity.

Emphasis mine. These quote show that the declaration of a recession (or its end) is a judgment call. It's somewhat subjective.

So tell me, what is this One True Definition of recession in your eyes?

 

[CRGreathouse]

So tell me, what is this One True Definition of recession in your eyes?

From the first of two consecutive quarters in which the GDP falls, until the GDP grows for two consecutive quarters.

 

[Jack21222]

From the first of two consecutive quarters in which the GDP falls, until the GDP grows for two consecutive quarters.

Do you have a credible source for that? I posted something from the NBER, who made this "ended in June 2009" declaration, and they disagree with you. They state that it's a judgment call.

 

[CRGreathouse]

Do you have a credible source for that? I posted something from the NBER, who made this "ended in June 2009" declaration, and they disagree with you. They state that it's a judgment call.

They might -- but your quotes don't support that.

There are economists who want to change this as the standard definition, e.g. Gary Becker. But it is the standard definition.

 

[Jack21222]

They might -- but your quotes don't support that.

There are economists who want to change this as the standard definition, e.g. Gary Becker. But it is the standard definition.

Please post a source for your "standard definition." I've checked the NBER website and Wikipedia, and neither supports your claim. The NBER's website defines a recession thusly:

A recession is a period between a peak and a trough

While Wikipedia says:

In the United States, the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER) is generally seen as the authority for dating US recessions. The NBER defines an economic recession as: "a significant decline in [the] economic activity spread across the country, lasting more than a few months, normally visible in real GDP growth, real personal income, employment (non-farm payrolls), industrial production, and wholesale-retail sales."[8] Almost universally, academics, economists, policy makers, and businesses defer to the determination by the NBER for the precise dating of a recession's onset and end.

Oh, and here is another wonderful quote from the NBER, via Wikipedia's 8th reference:

http://web.archive.org/web/20071012231548/http://www.nber.org/cycles.html

The NBER does not define a recession in terms of two consecutive quarters of decline in real GDP. Rather, a recession is a significant decline in 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.

It doesn't get any more clear than that. Do you have a source better than the NBER?

Edit: I should also make my point more clear. There is a definition of recession, but it doesn't have any hard rules. It's somewhat subjective. The NBER made a judgment call that the recession ended, while Warren Buffett makes a different judgment call. It's difficult to say one is right and one is wrong based on a definition which allows judgment calls.

 

[Astronuc]

Since things are going so well with the economy, just like they were in 2007 and 2008, I sure some can appreciate that - Food stamps keep climbing

Food stamps now cost the government $5.6 billion per month, as more and more people sign up for the benefit.
http://www.csmonitor.com/Business/Paper-Economy/2010/1009/Food-stamps-keep-climbing