Report: Recession ended in June '09

And it really was the worst downturn since World War II, the National Bureau of Economic Research says. But the organization cautions that recoveries are often slow.

By Charley Blaine Sep 20, 2010 11:42AM
Updated: 6:20 p.m.

You could probably be forgiven for saying you missed this event, but the recession that began in December 2007 ended -- in June 2009.

That's the word today from the National Bureau of Economic Research, which dates recessions.
But if you think the recession was a stinker, you're right. At 18 months, the 2007-09 recession was the longest since World War II. It took the top spot from the severe recessions of 1974-75 and 1981-82, both of which lasted 16 months.

But the NBER was careful to say that the end of the recession does not mean happy days are here again. "Economic activity is typically below normal in the early stages of an expansion," the NBER's statement said, "and it sometimes remains so well into the expansion."

The NBER's Business Cycle Dating Committee also decided there's no chance of a double-dip recession. That's the idea that an upturn might not be strong enough to be a recovery and that a subsequent downturn would simply be part of the original  recession.

The worry for the past few months has been that the slowdown that set in during the mid-to-late spring was the start of the recession taking over again.

Take that idea off the table, the NBER said. Any future downturn -- even one that starts now or in the next few months -- will be a new recession. The reason: "The length and strength of the recovery to date."

Many economists had concluded long ago the 2007 recession ended in mid-2009. Investors in U.S. stocks had come to a similar conclusion. By the end of June 2009, the Dow Jones industrials ($INDU) were up 29% from their low on March 9, when the market bottomed.

The Dow was up 111 points this morning to 10,719. That's up nearly 64% from the 2009 bottom.

But while the recession has ended, the recovery has been extremely difficult. The official U.S. unemployment rate was 9.6% in August.

A second measure that includes people who have given up looking for jobs or have taken part-time work is at nearly 17%.

Homebuilding has basically collapsed, and home prices are down sharply from their peaks in 2005 and 2006. A National Association of Home Builders survey released today shows that few builders are optimistic. Retail sales have been flat to modestly higher, at best.

This isn't so different from the 1981-82 recession. The unemployment rate was 10.8% when the NBER says that recession ended, according to the U.S. Bureau of Labor Statistics. The unemployment rate wouldn't fall below 10% until July 1983.

So why did the NBER wait so long? The delay is partly because the NBER bases its dates on a number of indicators, including gross domestic product, income, employment, industrial production and wholesale-retail sales.

In addition, the organization typically waits for all the revisions to the indicators it watches most closely. The more recent revisions they were looking for came in July and August.

The NBER's imprimatur provides a generally agreed-upon time line to researchers trying to understand the causes and effects of the downturn.


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[BRIEFING.COM] The stock market is doing pretty much what it was expected to do today in front of the FOMC decision (i.e. nothing).  The major indices are little changed as traders wait anxiously for the Fed's latest directive and updated economic projections.

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Mr. Hilsenrath's article ... More


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