The NBER dating committee declares the recession ended 15 months ago. Interesting, to say the least. The economic implication is negligible, but how this story is digested by the media and public will be fascinating. Key lines from the note --
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.
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.
I can already imagine the five stages of grief.
Denial. No! Look at the unemployment rate! Look at the UI claims. The poverty rate was just anounced last week as skyrocketing!! Are you kidding me?
Anger. Pundit's snarky lines (which I am seriously tempted to make) will be laced with sarcasm. But let's face it, most pundits don't really understand economics. They understand the economy is bad. Therefore, they have license to mock anyone who says otherwise. In fact, there aren't many better economist than those who serve on the dating committee, but it will take a few stages for that to sink in.
Bargaining. The political types will start figuring out ways to use this to their advantage. I can already see the GOP claiming that the so-called Bush recession ended a long time ago. Everything since must be Obama's fault. The party line on the left will emphasize the progress that's been made (which is true), saying the NBER date is a validation (which is a stretch). The public will realize that economic dating committees don't matter, and that getting upset doesn't matter either. Economists will think long and hard about the use of a binary measure of macro states.
Depression. In this case, the phrase might be literal. If, in a few months, mortgage delinquencies multiply, GDP growth stalls, investors get panicky, and T-bill rates get out of hand ... then relative comparisons to previous recessions will be moot. We'll start thinking about relative comparisons to previous great power declines. Goodbye, Professor Paul Krugman. Hello, Professor Paul Kennedy!
Acceptance. The fact is that the last 15 months have been the vital stages of economic recovery, a particularly slow and painful recovery. We have to accept that the next five years are likely to be like this. But the other reality is that the NBER dating committee has this vital, logical wisdom embedded in its decision:
"The committee decided that any future downturn of the economy would be a new recession and not a continuation of the recession that began in December 2007."
Let's remember that the Great Depression was a double-dip, and that the initial efforts by Hoover and FDR could not heal the wounds of the banking collapse. Like that time, this is not just another recession. As Reinhart and Rogoff might say, this time is different. (Note, these is a PDF available of their paper of that tile, but I can't link to it easily. Just Google).
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