Recession is Officially Over–Now What?

The National Bureau of Economic Research, a private nonprofit organization of economists and official arbiter of when recessions start and end, has declared that the Great Recession ended in June 2009. In other words, we are 15 months into the recovery:

“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.”

The Obama Administration is making a lot of hay over the fact this recession is the longest since the Great Depression, but the numbers show that misleading nature of this claim. The Great Recession, while steep and severe, was most comparable to the recession of the mid-1970s and early 1980s. Both of these recessions are best seen as significant economic realignments of supply and demand to adjust to new competitive realities (the first was the price of energy and the second was global competitiveness).

The NBER also took painstaking efforts to say the end of the recession did not imply robust growth or recovery:

“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.”

One way to look at this is that we are one year into a “lost decade” of economic stagnation. While the Obama Administration can slough off blame for the Great Recession, it’s goign to have to take responsibility for America’s Lost Decade.