Woo Hoo, The Great Recession is dead. Well, at least according to the experts who make the call.
A committee of the National Bureau of Economic Research has decided that it started in December of 2007 and ended June of 2009.
Click Business Cycle Dating Committee, National Bureau of Economic Research to see the full report and here is the introduction:
CAMBRIDGE September 20, 2010 - 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.
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.
The committee decided that any future downturn of the economy would be a new recession and not a continuation of the recession that began in December 2007. The basis for this decision was the length and strength of the recovery to date.
For those (most of) you who do not follow the economy, GDP, labor statistics every day you are wondering, “Well great but why does it feel like we are still in one? The jobs are not back.”
And you are correct. After June of 2009 employment worsened and we are basically now where we were when the recession technically ended.
Jobs are always a lagging indicator in the economy. Companies hire after a recovery begins and continue to do so even after a slow down starts because they may not be sure it is real.
For example, peak employment was November of 2007 yet the Great Recession started the next month.
Jobs always lag behind just as they are now. Yes the economy is “better” but jobs are not yet in abundance. Most companies continue to sit on their cash reserves until they feel it is safe to hire again.
So while The Great Recession has ended the hangover lives on.