It’s about to become official: The recession is over — but not the pain.
The government will release figures this week expected to show that the economy has awakened from its deepest slump since the 1930s and is in the early stages of a recovery. But the following week, the government will issue another set of figures expected to show unemployment continuing to rise toward and possibly above a clearly recessionary 10 percent.
How can both be possible?
The government releases third-quarter Gross Domestic Product figures on Thursday. Many forecasters say they will show GDP growing at an annual rate of about 3 percent, validating a widely held belief among economists that the recession ended in June or July.
But try telling that to the more than 15 million still unemployed, the small businesses and individuals who can’t get loans and the people whose homes are worth less than their mortgages.
Assertions by government and private economists that the recession is over — issued amid graphic examples of continuing wide distress — are raising fresh questions about economic scorekeeping.
The national recession may be technically over, but the state of the economy remains in the eyes of the beholder.
Or, as Ronald Reagan liked to say, a recession is when your neighbor loses his or her job. Depression is when you lose yours.
A survey of economic forecasters prepared by Blue Chip Economic Indicators, a research organization, predicted GDP growth to remain positive in each quarter through the end of 2010. In a survey by the National Association of Business Economics, 34 of 43 economists polled said the recession is over.
“From a technical perspective, the recession is very likely over,” said Federal Reserve Chairman Ben Bernanke.
But nobody is sugar coating the statistics, especially in the administration, which agrees with private surveys suggesting that unemployment will hover near 10 percent through most of next year.
“Even when you’ve turned the corner, you have so much work to do,” Romer told Congress’ Joint Economics Committee.
And while she credited much of the turnabout to government stimulus measures and moves by the Fed, she said “by mid-2010, fiscal stimulus will be contributing little to further growth.”
The economy has lost 7.2 million jobs since the recession began in December 2007, 3.4 million of them since President Barack Obama took office in January.
James K. Galbraith, an economist at the University of Texas at Austin, suggests too much attention is given to when recessions technically begin and not enough to other measures of the economy.
“It’s just a word. A recession technically lasts during negative quarters. But that doesn’t mean you’re back to prosperity once you have positive growth. You’re back to prosperity when the unemployment rate is back around 4 percent,” Galbraith said. And that, he said, could take years. (AP)
