Are We Out Of The Recession? Not!
Are we out of the recession? We at FRANCONOMICS don't think so at the time of this writing (November 2009). Quarter over quarter growth needs to be sustained for the technically focused pundits like Bernanke to admit that we are not out of the recession yet. One more quarter over quarter decline, and we are still in the middle of the recession!
Typically, two quarter over quarter GDP declines define a recession. However, there are other parameters which the NBER (National Bureau of Economic Research) includes to decide when a recession begins and when it ends. For example, the current recession began in the fourth quarter of 2007, when we had one, not two, quarter of negative GDP growth…
Further, it should not matter to the average American what the NBER says or what bureaucrats like Bernanke say; for, unemployment keeps going up. On Nov 6th, 2009, official unemployment shot past the 10% mark, and now stands at 10.2%, a 26 year high. This amounts to a 25% to 30% real unemployment / underemployment combined. Further, foreclosures are going up, not down. House prices have not stabilized: those who are buying houses now will experience falling housing prices in the near future, once the Obama Tax Credit of $8000 for new buyers expires by the end of November 2009.
In short, people are losing jobs, houses, spouses (sometimes, when someone loses a job / home, s/he loses the spouse as well). So just because a Bernanke jawbones that we are out of the recession, we are out of the recession, we are out of the recession, are we really out of it?? Not!
Update on December 20, 2009: The $8000 Tax Credit for first-time home-buyers has now been extended until the middle of next year. Also, a new tax credit of up to $6500 has been provided for to help “move-up” buyers. However, the fact that banks are milking Americans on credit-card debts, coupled with inability of those who keep losing jobs to pay their mortgages, means that foreclosures will keep rising. As long as Americans keep losing jobs, houses, and spouses, we can’t say that the recession is over!
Also see the write-up on Real Unemployment.
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