Recession ended in June 2009

[A Christian Sceptic]

I see the economic illiterates are out in force. This is why too much information can be a bad thing to the highly uneducated masses and then you give them an open forum (the internet) to say whatever the hell they want. Not a good combination.

On behalf of all the uneducated (or was it unwashed) masses ...
Please draw us stick figures instead of using all these words.

Thanks.

 

[A Christian Sceptic]

Instead, he started out at 700-800 billion because he thought it was more politically viable. So now we're left to wonder how that happened. Did he really think that $800 billion would be sufficient? They said they could keep unemployment under 8%, then they get worse numbers, but still offer a bill based on the earlier numbers...it's hard to defend them on this one.

Maybe $800 billion is all the special interest groups needed?

 

[dudalb]

On behalf of all the uneducated (or was it unwashed) masses ...
Please draw us stick figures instead of using all these words.

Thanks.

We agree on that.......
I agree that ignorance of economics is a major problem, but this kind of "The Proles are too stupid to understand it" rhetoric won't improve matters.

 

[gnome]

I don't see how broadening the term "recession" to mean something other than its definition helps. If you want to talk about something other than GDP growth (like unemployment), go ahead. Why appropriate a different term?

To me it's like claiming that the fire's still burning because you haven't rebuilt the house yet.

 

[A Christian Sceptic]

Didn't the stock market and such surge upwards during the Great Depression? What were people saying at the time - that the recession was over?

 

[TraneWreck]

Didn't the stock market and such surge upwards during the Great Depression? What were people saying at the time - that the recession was over?

It recovered quite rapidly during FDR's first term. He then caved under political pressure in the run-up to the '36 election and imposed austerity measures to balance the budget. This led to a second, deeper dip, and we didn't recover until WWII.

Here's a graph of the GDP:

http://en.wikipedia.org/wiki/File:US_GDP_10-60.jpg

 

[drkitten]

Didn't the stock market and such surge upwards during the Great Depression? What were people saying at the time - that the recession was over?

It fluctuated. You can track down historical stock prices if you like. But the stock market isn't the sole, or even the best, determinant of whether or not the economy is in recession; the stock market tends to be a strongly leading indicator (just as unemployment is a lagging indicator).

The single best indicator of a recession, if you had to pick one, is probably the GDP growth. The "conventional" working definition of a recession, for example, is two consecutive quarters of negative GDP growth (although the NBER uses a more complex and informative basket of indicators to make the "official" decision). For the Great Depression, we saw a classic "double-dip" recession; GDP dropped dramatically between 1930-4, started to climb sharply in 1935-6, and then fell again in 1937-8 when the 1936 election-year politics forced FDR to withdraw the stimulus packages that he had been using since his ascention in 1933. (Not coincidentally, that's more or less the pattern that we're seeing today; Obama's stimulus seems to have worked -- we were seeing positive GDP growth from mid-2009 to late 2010 -- until Republican obstructionism stalled any further stimulus funding, to the point where a double-dip recession appears to be rather likely.)

 

[drkitten]

It recovered quite rapidly during FDR's first term. He then caved under political pressure in the run-up to the '36 election and imposed austerity measures to balance the budget. This led to a second, deeper dip, and we didn't recover until WWII.

According to the data I have, the '37 dip was not as deep as the '29-33 dip. That data was for the GDP, but the stock market is similar.

In direct answer to ACS, yes, you could have made a tidy profit -- nearly a 4-bagger -- investing heavily in January 1933 and selling in January 1937. That doesn't mean that the Depression was over, though....

 

[kuroyume0161]

And your solution is............

Make laws and enforce them so that these things are not allowed. Keep the powerful from becoming absolutely powerful (they are currently reaching that point once again). But we always quibble about who is justified and deserving of hoarding the wealth ("no one" is my answer). We will never learn ("The poor will always be with us."). Need not be true but with the inequalities of our society they will continue until extinction. Next sentients, please.

 

[TraneWreck]

According to the data I have, the '37 dip was not as deep as the '29-33 dip. That data was for the GDP, but the stock market is similar.

In direct answer to ACS, yes, you could have made a tidy profit -- nearly a 4-bagger -- investing heavily in January 1933 and selling in January 1937. That doesn't mean that the Depression was over, though....

You're right. The second dip wasn't as bad.

 

[BenBurch]

I see someone is going through a "F--- The Establishment" and a "Cool Existential Despair" stage all at once.

lol

 

[kuroyume0161]

Edited by Tricky: 

Edited for civility.

 

[BenBurch]

Edited by Tricky: 

Edited for response to modded post.

 

[theprestige]

A lot of people busily re-defining "recession" here.

Not me. I'm pointing out that the definition of "recession" is different from the perception of "recession", and that people who perceive themselves to be in a recession will probably have very little patience for people who insist that they're not technically in a recession.

But speaking of redefining "recession", more on that in a moment.

I think you're misconstruing us saying 'the recession is over' for 'everything is rosy'

I can't speak for dudalb, but personally I'm not misconstruing what you're saying at all. I'm construing that "the recession is over" isn't nearly as meaningful a statement as some might think, due in large part to the fact that everything is not rosy.

And speaking of everything not being rosy, I'm beginning to wonder if maybe the middling indicator really is the best metric of recession.

Far be it for me to disagree with the smarty men who have chosen this or that particular line on this or that particular chart, as their formal definition, but it seems to me that a better definition of "recession" would take into account the damage done during the downward slide, and the amount of recovery that's still needed to get from the bottom of the hole back to something substantially better.

Maybe measuring the first precipitous drop in the leading indicator to the final upward surge of the trailing indicator would give us a much better picture of the entire process of collapse and recovery, from that sickening moment when we first felt the bottom fall away, to that point when we finally felt like we had solid ground under our feet again.

Such a measure would certainly better align with how we feel about recession, and understandably so. I think for most Americans, the recession won't be over until some substantial amount of recovery has taken place. And that hasn't really happened yet.

So to me, "the recession is over" may be technically correct--and, pace LibraryLady, economically literate--but it's also practically meaningless.

Doesn't it leave you with a bad taste in your mouth to be saying "the recession ended a year ago!" just as Congress has found it needful to extend unemployment benefits--again?

 

[kuroyume0161]

Not even a big smilie got the point across? Geez....

 

[gnome]

@theprestige-- I understand, but I think you're looking for a different word.

To extend my metaphor--I see the confusion... contemplate a house fire.

When the actual burning stops, someone might say "Ok, the fire's out"... but someone who lived there would say "I'm still suffering from this house fire"--to them the event is still occurring even if the actual fire is out.

It's good to remember that ending the recession isn't the entire problem, but there are better ways to promote that than to redefine "recession" to be less precise. Better to point out how narrow the definition is, and establish a broader term. Or find one to bring out.

malaise?

 

[drkitten]

Not me. I'm pointing out that the definition of "recession" is different from the perception of "recession", and that people who perceive themselves to be in a recession will probably have very little patience for people who insist that they're not technically in a recession.

Shrug. People are dumb.

The flood is technically over when the water levels go down; not when you finally clear the mud out of your basement. You stop being unemployed when you get a new job, not when you've replenished your savings and paid off all the accumulated bills. The party's over when the guests leave, not when they recover from their hangovers the following morning. For that matter, as soon as the surgeon stitches you up and sets his tools down, you're no longer "in surgery," but "in post-op," even if you still feel like hell and require several weeks of rehab.

Far be it for me to disagree with the smarty men who have chosen this or that particular line on this or that particular chart, as their formal definition, but it seems to me that a better definition of "recession" would take into account the damage done during the downward slide, and the amount of recovery that's still needed to get from the bottom of the hole back to something substantially better.

"Better" to what purpose? The "smarty men" separate the recession from the recovery for the same reason the medical types separate surgery from post-op; it's a different phase with different procedures, needs, and risks.

And, frankly, the economy is already "substantially better" in almost all ways except for unemployment -- which is almost always a lagging indicator -- than it was at the trough of the recession. We're no longer at "the bottom of the hole" (for which I am decidedly grateful, I assure you). But if you waited until everything recovered to pre-recession levels,.... well, the economy would pretty much be in eternal recession. The NASDAQ hit its all time high in early 2000, which means that we would still technically be in the "recovery" from the dot.com crash. The Great Depression of the 1930s would have lasted to 1955 and beyond if we had to wait until the DJIA recovered all the ground it lost in 1929.

There are some people who never recovered from the Great Depression. There are some people who will never recover from the Great Recession. (If you were in a marginal industry and 58 years old, for example, you might just have experienced the last fully-employed day of your life.) But that's precisely why economists have an economic definition of "recession" and not a psychological one.

 

[gnome]

Didn't the stock market and such surge upwards during the Great Depression? What were people saying at the time - that the recession was over?

They might have said the stock market crash was over.

 

[Malerin]

Warren Buffett tells CNBC that by his own "common sense" definition, the United States is "still in a recession."

http://www.realclearmarkets.com/video/2010/09/23/buffett_were_still_in_a_recession.html

 

[BeAChooser]

It recovered quite rapidly during FDR's first term.

But who says it wouldn't have recovered anyway? Many economist now believe that Hoover's and FDR's programs only managed to turn what would have been a normal recession into a deep depression, and then prolong that depression for a decade. For example:

http://online.wsj.com/article/SB123353276749137485.html ”How Government Prolonged the Depression”

http://newsroom.ucla.edu/portal/ucla/FDR-s-Policies-Prolonged-Depression-5409.aspx “FDR's policies prolonged Depression by 7 years, UCLA economists calculate”

http://www.independent.org/publications/tir/article.asp?a=430 “Regime Uncertainty: Why the Great Depression Lasted So Long and Why Prosperity Resumed after the War”