Millions of unemployed in the U.S. may not feel it, but according to the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER), the U.S. recession had ended – in June last year. “The trough marks the end of the recession that began in December 2007 and the beginning of an expansion,” the committee said on September 20. “The recession lasted 18 months, which makes it the longest of any recession since World War II. Previously the longest post-war recessions were those of 1973-75 and 1981-82, both of which lasted 16 months.”
The U.S. Recession Is Formally Declared Over
It typically takes the committee many months to make a formal declaration as it awaits final revisions to data and weighs the factors it considers in making its judgement. The revisions in the National Income and Product Accounts that were released in July and August this year confirmed that the trough occurred in June last year and that economic expansion has been sustained since then.
The NBER stressed, however, that the U.S. economy has not returned to operating at normal capacity. “Economic activity is typically below normal in the early stages of an expansion, and it sometimes remains so well into the expansion,” it noted. If the economy experiences a downturn again, it would be a new recession “and not a continuation of the recession that began in December 2007.”
What next? “While the declaration marks a milestone, the economy still faces stubbornly slow growth and thus persistently high joblessness,” says the Wall Street Journal. “That point was driven home by a report Monday from the Organization for Economic Cooperation and Development in Paris, which said it doesn't expect the U.S.’s unemployment rate to fall to prerecession levels until at least 2013.”
Even so, the newspaper pointed to recent better-than-expected data on housing, manufacturing and employment as signs that the economy may have avoided a double-dip recession. “Another upbeat signal is that companies have notched strong earnings in recent quarters—and are expected to do so again when they start reporting third-quarter results next month—raising hopes that firms might soon crank up hiring,” it said.
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