The recession that began in 2007 is probably over now, the head of the Federal Reserve said Tuesday.
That doesn't mean good times are suddenly rolling again, but the statement by Ben Bernanke adds an official voice to a consensus that has been growing in recent weeks among economists.
"From a technical perspective, the recession is very likely over," he said. He said most forecasters believe the economy will grow in the current quarter and continue on an expansionary path into 2010 – but that they also expect a weaker-than-usual rebound in jobs.
Despite the careful qualifiers in his statement, Bernanke's comment may be as close to an official declaration on the subject for months to come. The turning points from recession to recovery are formally declared by a committee within the National Bureau of Economic Research, which typically makes its calls many months after the fact.
The phrase "from a technical perspective" is significant. Bernanke knows as well as anyone that what matters to ordinary Americans is not just the technical end of recession, but whether jobs are available and wages are rising.
"It's still going to feel like a very weak economy for some time. That's a challenge for us," Bernanke said.
Clash of views on 'jobless' recovery
He cautioned that economic forecasting is far from an exact science – a warning against viewing either upbeat or downbeat views as a foregone conclusion.
Some forecasters, for example, question the widespread view that the recovery will be a "jobless" one.
"Deep recessions ... tend to give way to stronger-than-average recoveries in both output and employment," Michael Darda, chief economist at MKM Partners in Greenwich, Conn., wrote to clients last week. "We can go back through nearly 100 years of business cycle history and there are really no exceptions to this rule, including the 1929-1939 period."
Those who hold a less optimistic view focus on tight credit conditions and historic levels of household debts facing consumers.
Whether there's a solid rebound in jobs or not, the economy has a big hill to climb to get back to pre-recession employment levels. The US has lost nearly 7 million jobs since December 2007, when the downturn officially began.
In good times, the nation typically adds about 200,000 jobs per month. That's a "net" number, with new hires offset somewhat by employers that are downsizing. In recent months, the economy has continued to lose jobs on a net basis. But the pace of the decline has been slowing, which typically occurs as a recession ends.
Momentum for reform
Bernanke's speech Tuesday came on the anniversary of the Lehman Brothers bankruptcy a year ago, which spawned a global financial crisis and ushered in the recession's darkest phase.
The Fed chairman said that, even as the economy recovers, Congress should pass regulatory reforms to make such a crisis less likely in the future. President Obama made the same pitch in New York Monday.
Some policymakers worry the momentum to pass such reforms is dwindling as the financial system shows signs of recovery.
"I remain pretty optimistic that … reform will be forthcoming," Bernanke said. "This has just been too big of a calamity and too serious of a problem."
Among the reforms would be closer oversight of complex investment contracts known as derivatives, and a "resolution" mechanism to wind down giant financial firms that fail – without a taxpayer bailout.