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Kimberly Amadeo

NBER Officially Declares End of Recession

By September 21, 2010

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The National Bureau of Economic Research (NBER) declared yesterday that the Great Recession was officially over as of June 2009.

(Crickets chirping)

Yes, instead of great cheers of relief, this announcement was pretty much met with silence. Why should you be cheering, even if no one else is?

True, this recessionhas left devastation in its wake. It still feels like a recession for the 14.9 million Americans who are unemployed. It feels like a depression for the 6.9 million who've been unemployed for more than 27 weeks, and the 2.4 million who have just given up looking for a job.

It feels like a recession for the more than 300,000 homeowners who lose their homes to foreclosure each month. And to those who'd like to retire, but can't because they lost money in their IRAs and 401(k)s.

However, even for those who have been hit hard by the recession, the NBER announcement provides a ray of hope. Here's why.

The NBER analyzes lots of data, including  GDP, income, employment, industrial production, and wholesale-retail sales. This data has looked strong enough for long enough for them to declare that the start of the rising phase of the business cycle had begun last July. The NBER reminds us that

Economic activity is typically below normal in the early stages of an expansion, and it sometimes remains so well into the expansion.

In other words, it is normal for the recovery to look anemic in the beginning. Those who say we are headed for a double-dip recession seem to be ignoring this fact.

What It Means to You

The economy is slowly improving, but it has shifted. This means you can start to plan for a better future, but you've got to be armed with knowledge. For example, if you're an unemployed construction worker, housing construction won't be coming back for a few years (most likely). Think about retraining in the health care field, which has been hiring steadily throughout the recession. In any case, think about how you can bring in more than one stream of income. Is there a hobby you can start making money from?

If you haven't talked to your financial planner in a year, give her/him a call. If you don't have one, get one.

If you are a business owner, think about how you can add value. Research shows that shoppers will drive further if they feel they are getting a good product or service for the price. In this way, you can keep your prices (and your margin) stable.

These are just a few ideas. Brainstorm more to fit your own personal situation. Dare to hope that things will get better, and take action. It's a heck of a lot better than waiting for the other shoe to drop.

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September 30, 2010 at 3:04 am
(1) eleuter kihwele says:

very good to here that the Recession is winding off, the releave in Less Developed Countries will be realized.

September 30, 2010 at 7:38 pm
(2) Kyle Bianco says:

Although it appears as though there is economic recovery for
Wall Street. With major multinational corporations holding several trillion dollars in capital. The rest of the population is left holding the bag. The general population’s largest investment, home real estate, is in value decline. Pensions in financial trouble across the country. Very little growth in employment and declining wages. With Poverty and homelessness on the rise, now 13-17% of the US population. Little opportunity for the country’s up coming and highly educated population. No way for them to pay for tuition loans, medical insurance, or self support. A shrinking tax base where city, county, and state budgets are in serious trouble. Can we really say, the recession is depression over? Or is the US following in the foot steps of Japan’s two decade. Economic indicators pointing to great economic health while the general population suffer and are exploited. A great business model for large corporations to get cheap labor. For the general population of the US a depression is in full swing.

October 4, 2010 at 2:47 pm
(3) eric palmer says:

How can the recession be over? When we have found recovery by farming out our jobs to every third world country because it saves money to show profit during a recession. I guess as long as corporate America shows a profit we should all rejoice. I am so happy the’re able to buy the new house and new car while I have lost my cars and my house and have exhausted my unemployment. Most of America is being forced to take jobs that barely put food on the table. But hey lets sing praises because now the corporate heads are able to buy that new jet they have had theyre eye on. BRING THE JOBS BACK TO AMERICA. I AM TIRED OF TALKING TO TECHS IN THIRD WORLD COUNTRIES AND NOT SEEING ANYTHING THAT SAYS MADE IN AMERICA.

August 10, 2012 at 12:56 am
(4) Coco Robinson says:

This article was written September 21, 2010. It is now almost September, 2012 and the economy is still suffering record devastation that is not going away. According to a study by the Federal Reserve published June 12, 2012 the global financial crisis erased 18 years of gains for the median U.S. household’s net worth. From 2007 to 2010, the S&P/Case-Shiller U.S. Home Price Index dropped 23%. Retirement accounts — important supplements to Social Security and other types of retirement income — were also badly hit. During the same three-year period, the Standard and Poor’s 500 Index lost 14% of its value. 44% of Californians are currently on some form of government assistance, and it is almost impossible to get any true figures for 2011-2012 until after the elections. So I have a very important question for everyone (crickets chirping): Who, exactly takes responsibility for telling the people of a nation they are “out of a recession”, when they continue to lose their homes, their jobs, and their families? Who takes responsibility for the false hope, the lack of support for successful economic leadership, and the blatant reconstruction (falsification) of figures? (Crickets still chirping…)

August 10, 2012 at 12:08 pm
(5) Kimberly Amadeo says:

Hi Coco,

Your point is well taken. For many people, it doesn’t feel like the recession is over. Older workers who have been laid off will probably never earn what they did before. Younger folks who are looking for their first job won’t find the same opportunities they would have five years ago. You are right, that they won’t recoup.

However, the economy is better off than it was two years ago. Housing prices have bottomed out. The Dow is above 13,000.And economic growth has been positive — not negative — for the last two years.

Is it false hope? If you ask me, hope is the one thing I cannot live without. Hope gives me the drive to keep on trying to improve my life, no matter what. With hope, I can have the confidence in myself to overcome the obstacles and prosper.

More important, confidence is what will put this economy back on a solid footing. Once businesses are confident that they know we won’t fall off the fiscal cliff, the eurozone won’t fall apart, and the housing market will continue to rise, they will start hiring full-time employees again. Temporary workers are very expensive, but as long as uncertainty lasts, businesses will continue to use them in record numbers.


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