After the "great recession" of 2008, the National Bureau of Economic Research was quick to pin-point the end of the recession as of June 2009. I do not believe this is true.
I know that from a technical point of view based on arbitrary indicators like production, spending, and stock market recovery it may be considered over but for the average person, it is not. It has long been my opinion that economic policy is created in such a way that it makes it difficult to officially label a recession while making it equally easier to say we have rebounded out of one.
One thing that you have to remember about recessions and depressions is the fact that no matter what happens, people still need to consume goods! Our need for clothing, housing, food, transportation, and other essentials does not go away simply because our ability to earn more money is lacking. Yes, in 2008, production came to a big screeching halt as companies and banks came to terms with years of overspending with little cash reserves. Restructuring was the name of the game. Lay-offs came in big ways. Production grinded to a snail's pace as companies got rid of excess goods. Banks folded in mass numbers. The housing market most of it's gains. All that has happened since is a return to light production as we still consume goods while companies rebounded by building up cash reserves and stream lined production with fewer people. Banks stopped lending. Credit is hard to find and the housing market continues to loose steam. Most of 2009/2010 profits for companies is a result of this restructuring, not from boosts in sales. Take a close look. Revenue is up but when you subtract the inflation numbers, sales are barely above stagnant.
That is one trick that Wall Street likes to use. "Revenue" numbers vs. actual side by side sales comparisons. It's a publicity ploy to make people feel better. It sounds better to say revenue is up $1.5B than it is to say that sales only grew .01%. You usually have to read between the fine lines for the fact that most prices are above what they were last year. Again, they don't want you to realize that sales are flat and they certainly don't want to remind you that you are paying more for items this year than last. But since most average folks only skim through the headlines, it gives a false sense of security. It's effective. It works. But not for everyone. In the end, the uptick in production is good but it isn't at levels at would indicate a growing economy. It is at levels which indicate a stagnate one where consumers are purchasing things they need to keep going with limited funds spent on non-essentials. That, my friends, is not a recovery. It is a holding pattern which leaves us right about where we were in 2008...recession.
I'll go even further to suggest that while prices have gone significantly up (gas prices anyone? average $1 more per gallon over the same time frame last year! read how gas prices are affecting the family budget ), our salaries have not. And unemployment numbers remain stubbornly high as the numbers of people seeking unemployment benefits for the first time continues to outpace the numbers of jobs created. So where is the outrage? Where is the poor consumer confidence numbers? Simple human behavior... We have gone through the shock of loosing our jobs. We have gone through the shock of having to live without credit, paying down debt, reducing our budgets. It has been 3 years since the slide began. People are amazing. We adjust to new situations all the time. Less has become common therefore no longer devastating to our point of view. As personal debt goes down, a little extra cash can be found in budgets and people begin to feel cheery again. If you are anything like me, you've carefully planned for Christmas. You've used some tax refund money for a trip or home improvements. But that doesn't mean you are buying lots of extras in between.
And this doesn't even touch on the fact that much of our economy is being held up by government spending, It accounts for a huge portion of our current GDP. It can't be sustained forever.
Recession.
Also, I believe another round of economic strain is coming. This time, not from the private sector but from our local, state, and federal governments. read: ending the debt cycle Already my city is raising taxes by the legal maximum set by the state. My state is raising fees on items like parking fees at state beach by double! This is just the beginning. Can't wait to see what the federal government has planned to reduce the national debt.
2009 wasn't the end of the recession, it was just the point of stabilization until the next round.
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