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Your Take: Is The Recession Over?

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Recession BusterEarlier this week, Ben Bernanke, Chairman of the Federal Reserve, said the recession was “very likely over” but that the unemployment rate would likely still go up. There’s a lot of talk about a “jobless” recovery, that is a recovery in which new jobs aren’t created, with the unemployment rate not falling back to the normal 5% for at least another four years. Bernanke specifically said that the recession was likely over from a technical perspective, which is to say that we’ll probably still feel like a recession even if we don’t have two consecutive quarters of negative GDP growth.

So I wanted to know from you – do you think the recession is over? It’s one thing to look at “statistics” and declare victory, it’s another to look people in the eye and tell them that the recession is over.

Personally, I think that you can throw technical out the window because regular people don’t really care. Until people stop being afraid they’ll lose their jobs because of the economy, the recession isn’t going to be over. There have been a lot of positive things about this recession – Americans are repaying debt and saving more, frugality has made a resurgence, and there’s been a greater emphasis on emergency funds.

So… is the recession over?

(Photo: arvindgrover)

{ 62 comments, please add your thoughts now! }

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62 Responses to “Your Take: Is The Recession Over?”

  1. HT says:

    It’s like the B man said. The recession is likely over. Recession is a jargon word with a specific meaning… You’re right that regular people don’t care about the technical, you’re wrong about when the recession will end (or have ended).

    You could say until the fear is gone we won’t have a healthy economy.
    -HT

  2. lauren says:

    nope. i think a large amount of people are still holding their breath – living in ways they should not – credit cards, heloc, etc, to get back to the “better times” they once knew.

    ask around in the commercial property sector. the ones i know – vp of a very large company – says that market is just getting ready to go under. that won’t help.

  3. kathy holt says:

    I can hardly agree the recession is over. I was just laid off from my job of 21 years.

  4. Min says:

    Yes, HT has it right on. The term “recession” has a very specific definition. Now, is Bernanke right? It remains to be seen. But the opinions and attitudes of average Joes like you and me don’t determine that.

    In previous recessions, unemployment drop has lagged behind recovery by years (eg the 2001 recession was over by 2002, but unemployment numbers didn’t start falling until 2003, IIRC). This time will be no different. Most people will be hurting financially and in employment for the next couple years, even if the recession ends now.

    Maybe that’s an argument for a re-defining of the word “recession,” or having a colloquial and technical definition of the word “recession.” But that’s another discussion altogether.

  5. Brian says:

    Recession or not, I don’t think anyone should pay more than a dollar for a pint of PBR.

    I’m a software developer and I haven’t seen much of an impact from the recession, however, my dad works for an electrical distributor that mostly sells to the construction industry and he has seen a big impact. They have been required to take 1 week of unpaid leave for the last 2 quarters and have laid off about 1 employee each month since the start of the year.

    When this stops and construction bounces back will be when I feel better about the economy.

  6. Abby says:

    I think the important takeaway is this: the economy isn’t a monolith. It’s not all up or all down, even at extreme moments. My husband’s sector faltered early, but will (probably) recover early, too. Mine has been rock steady right through, but might suffer more at the tail end.

    For personal finances, prudence is always a virtue. But for businesses, this might be the Very Moment to invest – and to be poised to come out strong.

  7. akorozco says:

    There’s definitely a lot of confusion out there – this video (http://www.newsy.com/videos/is_the_recession_over) shows what media all over the world are saying about the economy. Sure, the stocks rallied after Bernanke’s announcement, but not everyone is as optimistic!

  8. I wondered the same thing when I hit an unexpectedly big crowd at a Labor Day sale at our local thrift store. Here are some details http://kitchentablenomics.blogspot.com/2009/09/omens-on-rack-at-thrift-stores-half.html

    But the bigger question may be, how will the recovery be different if the recession is over? Consumers theoretically drive two thirds of our economic output and I don’t see them returning to shopping on steroids until a lot more scar tissue heals.

  9. Amber says:

    None of our fearless economic leaders seemed to know the recession was coming. This limits my trust in their ability to predict its end.

    Otherwise, I totally agree with you. No one cares if the “recession” is over. They want to know when they will find a job.

    For me, I’m waiting for the other shoe to drop with interest rates on my student loans. I’d also love to see all the marketers quit using the word recession in their campaigns. I am so tired of seeing “stimulus” for things like buy one get one free sandwich deals and the like.

  10. Dustin says:

    Recession has a specific meaning. When the criteria that make up its definition no longer apply, it doesn’t matter what Joe the Plumber thinks…the recession is over.

  11. Dustin says:

    I meant to add…consumer confidence and other measures may remain low, which is what Jim is talking about really. If those measures don’t factor in to the definition of “recession” then see my previous comment.

  12. Tim says:

    we’re still in a recession. just because we don’t have negative growth, we are still negative from before and flat.

    • Neil says:

      So? The term “recession” means shrinking, not shrunk.

      Whether you think shrinking GDP is an adequate qualifier, or if you’d prefer that unemployment be taken into account is open for debate. But it doesn’t make sense to consider it a recession until all ground that was lost has been made up.

  13. Pat says:

    While it’s great that people are saving more (or at all), it will slow the recovery because spending is the engine of our economy. This is really a good thing though because our booming economy of the past was built on private credit/debt and the irresponsible nature of living beyond one’s means. Now, hopefully our economy will be built on a solid foundation.

    This makes be a bit worried about our Federal debt as it affects us all. I was/am responsible, but I have to pay for everyone else’s irresponsibility?

    Whoa, my inner conflict meter is off the charts right now. I’m traditionally very liberal and I can’t reconcile this cognitive dissonance! ARHG! Maybe I’m just socially liberal and financially conservative? Is that possible?

    • Pat says:

      Let me add…

      I always want to give a helping hand to those who have no other choice and really need it. But to those who take advantage of the system and are irresponsible, I say UP YOURS!

    • dilbert69 says:

      It is possible to be socially liberal and fiscally conservative. Small-l libertarians fall into this group.

  14. With all the trillions spent at the federal level, the economy might be growing technically, but it isn’t being reflected in jobs and foreclosures.

    We still need to be in hunker-down mode and probably will be for a long while. If we do it faithfully, we’ll be that much better off when the real recovery, the one we can FEEL, finally does take hold.

  15. Neil says:

    The thing about the end of a recession is that it means, for the most part, that people can stop worrying about LOSING their jobs. This doesn’t help the people who have already lost them.

    So as someone who’s stayed employed throughout, the recession is over. I haven’t been concerned about losing my job since I got shuffled into a more secure position – where someone needs to be doing my job in any situation short of liquidation – about 5 months ago.

  16. Ellen says:

    Webster defines the word recession as “a period of reduced economic activity.”

    My question: How can the recession be over if we remain in “a period of reduced economic activity” where people are still losing jobs, still not spending, and still losing money? I think Bernanke’s statement is just some sort of morale tactic. I’m waiting until I see real improvements to use the R-word.

  17. We are trading a recession now for a depression and possibly stagflation later.

  18. Rick Morley says:

    I want to say two things. First, the recession is actually not defined by Obama, or Bernanke, or 2 quarters of successive growth. The recession is defined by the National Bureau of Economic Research (NBER). They are the only ones that will say whether or not we are out of recession. And they do take into account job growth. So who knows whether or not we are actually out of recession yet.

    Second, it may indeed be true that we are now experiencing economic growth. But this growth is not true organic growth. The GDP growth is based purely and solely on massive government interventions and monetary injections into our economy. Just look. Not only did we have all the Fed programs, the bank bailout, the second bailout, we also have such programs as the cash for clunkers program, the first time home buyer’s tax credit, etc.

    The growth in car sales was based solely on the cash for clunkers program. Now that that’s over, what are car sales going to do? The bottoming out of the housing market was based on the tax credit. When that expires next month, what is the housing market going to do?

    The economy needs to be able to stand on its own two feet, not on government support. And it’s no where even close to being able to stand on its own right now.

    I believe we will go into a second stage of the recession next year, once trillions of dollars of Alt-A and negative amortization loans start resetting.

    • Chewbakka says:

      The magnitude of this wave has been said to be 1.5 times larger than the last wave of defaults…

  19. Patrick says:

    Great point Jim. It’s not over until the average person begins to feel like it’s over. We will probably not stop feeling the effects of the recession for some time even if/when it is over.

  20. Steven says:

    1. Like Neil said earlier, recession refers to shrinking economic activity. Job losses can occur during growth. Just because the unemployment rate grows, or remains stagnant, does not mean it’s still a recession.

    2. We will (hopefully) never go back to the “glory days” because it was built upon irresponsible spending, something that has changed for now. Whether people learn from their mistakes is another story.

  21. Jake says:

    The overall free-fall the economy has been in may have stabilized, but it is only brief. The wave of pending commercial real estate defaults and the corresponding shivers that will send through the capital markets (CMBS, CDO, lending) is going to drag us down even further.

    Add to that the fact that companies continue to lay off, there is tremendous underutilized production capacity in the manufacturing sector, and household incomes continue to fall. It’s a stretch for Mr. Bernanke to suggest that the recession is over.

    I am not betting on a near-term recovery, and when things do turn the corner watch out for inflation and rising interest rates! Things are going to get even more interesting over the next three to five years.

  22. freeby50 says:

    I’m convinced that the recession is technically over this quarter. GDP growth will return.

    Unemployment is still fairly high and make take a while before it gets back down to the 5-6% range. But once GDP growth returns then unemployment will start to gradually drop.

    Whether or not individuals ‘feel’ that the recession is over is up to them. But if its technically over then its officially over. I would hope that an official end to the recession would be one of the things that helps return confidence to individuals and help make them ‘feel’ better about the economy.

  23. Mel says:

    I think what he meant is that the freefall has changed to a controlled descent. I follow John Mauldin Thoughts from the FrontLine who thinks it will continue to decline through 2014. I think middle class is disappearing and upperclass is getting even wealthier at expense of the new lower class. Still can’t believe that the CEOs of financial institutions have the audacity to post highest earnings ever after taking bailout money months ago. Also taking the excessive bonuses for a job well done

  24. Randy says:

    I consider myself both an optimist and a realist; however, I believe the recession will exist for another six to eighteen months. I agree that we need to observe increased GDP before we realize any economic growth. I also believe that the USDOL is significantly under reporting their national labor statistics. I would prefer to see data which accurately represents the total number of American workers between the ages of 18 and 62. Then subtract the unemployed, underemployed, and individuals who have exhausted unemployment benefits from the aggregate. Moreover, job creation needs to be a primary focus of the recovery effort.

  25. Mary says:

    I totally disagree that the recession is over. Those of us living in FL have seen the values of our homes decrease dramatically, the unemployment rate is very high and the numbers have not come down. Most of my friends are amazed they still have their jobs and are still afraid that they could still lose it. Sales of durable goods, homes, and everyday items continue to be off. My friends still don’t have enough money to be able to put some aside in savings because the taxes and insurance in FL tripled over the past few years. Even if we wanted to sell our homes, they are not worth the mortgage values and won’t be for quite a while. Many of my friends are in foreclosure and could have sold their homes and moved on but because of the glut of houses on the market the banks are not interested in helping out. We are white collar workers who were caught by the market crashes, poor management of our retirement funds, and continued mis-management of big business. Recession over? I think not.


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