The Business Cycle Dating Committee of the National Bureau of Economic Research, which decides such things, said yesterday that it cannot yet be sure that the recession is over. But one member of the committee publicly dissented, saying that the recession actually ended last June.
So much for the idea that economics is an exact science.
Still, signs of recovery are not hard to find. The Dow Jones Industrial Average, a leading indicator, closed over 11,000 yesterday, for the first time since September 2008, at the height of the financial crisis. From its low in March 2009, the Dow has risen 68 percent. On the other hand, as economists love to say, unemployment (now 9.7 percent) remains near its peak of 10.2 percent, and most economists think it will remain high for a long time. Robert Reich, Clinton’s secretary of labor, explained why in yesterday’s Wall Street Journal.
It seems clear, though, that we are out of the worst of the woods. Banks have recovered and paid back most of the federal money pumped into them. Manufacturing has been increasing. The trade deficit has been rising, a sign of recovery.
And it is becoming clear that the Great Recession may have been a little less great than advertised, thank heavens. If 10.2 turns out to be the peak of unemployment (and, as firms start hiring again, more people, formerly discouraged, start looking for jobs, which can drive the rate back up), then unemployment this time around will not have been as bad as it was in the 1981-82 recession, when it peaked at 10.8 percent, let alone the Great Depression, when it peaked at over 25 percent. And the Dow has regained 58 percent of what it lost from it’s all-time high in October 2007, when it peaked at 14,164, to its bottom in March 2009, when it hit 6626. And did it in two and half years. By way of comparison, the Dow did not regain 58 percent of its 1929 high until 1950, 21 years later.
To be sure, September and October of 2008 were as scary a time in the American financial world as I have experienced in my lifetime — if a piece of cake compared with the winter of 1932-33. But the ensuing economic hard times were far less severe than seemed possible, even likely, in late 2008.
This country still has severe economic challenges facing it (the state and national deficits and unfunded liabilities being by far the greatest), but we’re much better off than many thought we would be a year ago.