With all the speculation of the U.S. economy entering into a double dip recession it is appropriate to note that it is now possible because the arbiter of such things has officially determined that we are out of the recession that began in December 2007.
The Business Cycle Dating Committee of the National Bureau of Economic Research (NBER) met on Monday and determined that “a trough in business activity” occurred in the U.S. economy in June 2009.
That is fancy language to say the economy hit a bottom and started moving higher. At this point it would be appropriate to point out that NBER makes this call 16 months after the trough and that their determination that we entered a recession in December 2007 came in December 2008, after the presidential election.
It is best not to rush these things and while it does serve a purpose, most folks knew things were not going well in 2008 and despite this bit of good news— equity markets made recent highs today — most folks are still feeling pain. In fact it would make a lot more sense to gauge the end of a recession by the point where the economy has regained its losses. After all, a trough doesn’t sound like good news. And while we know, for instance, that jobs are a lagging indicator; we can’t call it a recovery when unemployment is hovering around recent highs.
The NBER notes that the recession lasted 18 months, making it the longest on record since World War II. Something else that we basically knew.
Here is something else we know. This was not a garden variety recession but an economic tsunami caused by years of bad policy and short-term thinking. To the extent that business and government has addressed the fundamental causes is questionable. The remedies offered by the Federal Reserve and Treasury look awfully similar to those that helped cause the mess in the first place: easy credit and too big too fail institutions. Those institutions continue to get easy credit — and by the way continue to be too big too fail — but now they are not loaning it out. Their liquidity problems have been solved but credit is harder to come by for ordinary businesses and individuals. This has allowed those banking institutions to recover and post nice profits but not the rest of us. You know the folks who bailed out those institutions.