WHEN DID THE RECESSION END?

September 28, 2010

Well, it's official. The recession is over. According to an Obama Administration fact-finding study it ended in June.

Not this past June (2010) - but the year before - June 2009. That's 16 months ago!

Don't take my word on this. In fact, please... don't take my word on this!

All the credit goes to the National Bureau of Economic Research. They issued the pronouncement earlier this week.

Of course, the NBER's Business Cycle Dating Committee - which ordains the start and end of recessions - hastened to add that "it didn't mean that economic conditions since (June 2009) have been favorable; or, that the economy has returned to operating at normal capacity". What did the Dating Committee base their conclusion upon?

Reportedly, the experts "considered indicators including gross national product and income; manufacturing and trade sales; industrial production; payroll surveys; employment; and, the aggregate hours of work in the total economy".

Re-reading the list of economic indicators they considered makes their conclusion...well, uh, interestingly... curious.

Realizing the mid-term elections are fast approaching will make many wonder about the timing of the announcement.

That begs several questions including:

Do economists really need 16 months to reach a professional conclusion? Or, if data sifting and review requires such a long extended period of time, why not take another month or two? After all, wouldn't taking more time yield an even more thorough analysis with finite conclusions?

Imagine, investing two additional months in the economic analysis would provide worried citizens some profoundly good news for which they would be thankful come the last Thursday in November.

Of course, those who might conclude the lengthy assessment period was truncated in order to get it out now, would likely counsel me that, during even numbered years, the first Tuesday in November is more important than the last Thursday.

Setting aside the possible political influence in the timing of the release, let's hone in on a few of the indicators.

Succinctly, big bank balance sheets may be stronger; and, corporate profits may be up; but, so is unemployment. That's not good. In fact, it is bad. Worse, unemployment not only is likely to rise, it is expected to rise.

And, the way government bureaucrats manage unemployment data is a political manipulation. Perhaps, the good people at the NBER were unable to adjust the unemployment data upward in order to count all the real people who have lost jobs during the recession? Yet, at the same time, they were somehow provided with the hours the unemployed 'worked' actively seeking jobs; and, further, somehow were able to adjust the aggregate hours worked by both employed and unemployed individuals.

Could that be? Not likely. To be fair - and objective - the NBER analysis is based on what economists refer to as "lagging indicators". In other words: old news and old data.

That's what they use to aggregate, analyze, assess, assume, and announce. (Is there an acronym there?)

Regular visitors to this site will recall commentary from a two-part column series back in March 2009. Here are some excerpts for inclusion in your current thought mix.

First, from "So what is a recession, really?"...

"Recessions are like major league fastballs... they arrive at blinding speeds".

And, the reality is that "recessions, which are actually contractions, are part of the natural dynamics of all things economic".

In that piece, we also discussed how job loss can be so catastrophic to individuals and families as single or heads of households "can have their earned purchasing power evaporate in mere days or weeks". Next, from "Is a more depressing recession in the wind?"...

As economic downturns unfold, "recession(s) (are) usually made worse by inappropriate government interventions undertaken by..."

We also noted that "politicians who - along with special-interest groups and the media - spin the data in order to influence the public with skewed interpretations" make matters worse - much worse.

There is no doubt that all aspects of this have come to pass during this latest recession. It will surprise no one that some, for their reasons, will repeat the mantra: "the recession is over". Others, understandably, will respond, "Yeah, Right!"


We believe that the Constitution of the United States speaks for itself. There is no need to rewrite, change or reinterpret it to suit the fancies of special interest groups or protected classes.