Refusing to put an end to the recession
It has become conventional wisdom among commentators and many economists that the U.S. recession ended in 2009, particularly with that spurt of growth in gross domestic product in the fourth quarter.
So, why, then, did the nation’s arbiter of recessions, the National Bureau of Economic Research’s Business Cycle Dating Committee, refuse to go along with that thinking?
On Monday, the committee of prominent economic seers took the unusual step of refusing to assign an end date to the recession that began in December 2007, saying it lacked decisive data.
”Although most indicators have turned up, the committee decided that the determination of the trough date on the basis of current data would be premature,” the statement said.
Anticipating an announcement Monday, pundits had been speculating that the committee would declare the great recession over. Instead they got this statement: “Many indicators are quite preliminary at this time and will be revised in coming months,” the statement said. “The committee acts only on the basis of actual indicators and does not rely on forecasts in making its determination of the dates of peaks and troughs in economic activity.”
What could be clouding the committee’s thinking? Could it be the persistent high unemployment of nearly 10 percent? Could it be that while the federal government is pouring trillions into the economy, most private enterprises, particularly small companies, remain deeply cautious about the future? Could it be the committee members are concerned about a false prosperity built on government debt and a soaring stock market? Could it be they know what toxic assets remain out of public view on the balance sheets of the nation’s financial institutions? Could it be they find it hard to declare a recession over when tens of thousands of Americans are still losing their homes?
Could be.
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