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Recession over, but recovery not felt

Even official scorekeeper unimpressed with progress

- The Washington Times - Monday, September 20, 2010

The worst recession since the Great Depression ended more than a year ago, the nation's official scorekeeper declared Monday, but the aftershocks from the once-in-a-century event continue to reverberate through the economy and people's lives.

The National Bureau of Economic Research, a committee of academic economists in Boston, said the recession that began in December 2007 ended in June of last year, marking both the longest and deepest recession since the 1930s nightmare that shaped the lives of generations afterward.

But the committee — like the public at large — seemed unimpressed with the progress the economy has made since then, noting that it has not yet recovered all the ground lost during the recession. And it kept the door open to the possibility of a "double-dip" or second recession starting later this year.

"The recovery still feels like a recession" to many people, said Harm Bandholz, an economist at Unicredit Markets, noting that while the committee took painstaking care to declare a definitive end to the recession, its lack of "enthusiasm" about the recovery equals that of the public and most businesses.

The research group determined that while the plunge in overall economic output of 4.1 percent ended in June 2009, when the recovery began, the recovery in jobs and incomes started later — in December.

Since then, the recovery has generated nearly 800,000 jobs, but it is the lagging effects of the recession on the job market that makes the greatest impression on most people and is the reason that many Americans still believe the economy is in recession, Mr. Bandholz said.

Moreover, the housing and commercial real estate markets remain mired in deep recession, economists note, while other parts of the economy such as retail are barely recovering — reflecting the extraordinary depth and reach of the recession.

President Obama, his party facing a likely beating at the polls in November because of the economy, stressed the impact on ordinary people at a town-hall meeting hosted by CNBC.

"Even though economists may say the recession officially ended last year, obviously for the millions of people who are still out of work, people who have seen their home values decline, people who are struggling to pay the bills day to day, it's still very real for them," he said.

"The challenge is that the hole was so deep that a lot of people out there are still hurting," he said.

Consumers, students and small-business people at the meeting echoed his sentiments, detailing the hardships the recession visited on their families.

While the audience seemed largely friendly to Mr. Obama, one office worker said she is still struggling to make ends meet, even though the economy supposedly is in recovery. A recent law school graduate said he has been unable to get a job and start paying off his student debts.

"There aren't any jobs out there right now," said Ted Brassfield, noting that many people in his generation who voted for Mr. Obama are now disillusioned. "Is the American Dream dead for me?"

The president urged people to take hope and said he has done what he could to address both the recession and the huge $1.3 trillion budget deficit he inherited and found "tied up with a bow" on the Oval Office desk the day he took office in January 2009.

He rejected arguments from Republicans that his administration has been "anti-business" and has been thwarting growth. While taking steps to try to speed a faster recovery, he said the economy typically recovers only slowly from deep recessions and restoring it to full health will take time.

"Everything I'm doing is thinking about how do we grow this economy and how we grow this middle class. It has not happened fast enough. I know how frustrated people are," he said.

"But I also know this: That an economy that was shrinking is now growing. … I am confident that if we stay on a course that gets us back to old-fashioned values of hard work and responsibility and looking out for one another, that America will thrive."

GOP leaders continued to fault Mr. Obama for his handling of the economy and suggested the recession is still in force.

"Once again, President Obama trotted out the same old worn-out reassurances on the economy, but Americans are still waiting for the promised recovery that never arrived," said Republican National Committee Chairman Michael S. Steele.

The economy is likely to remain political fodder through the campaigning for the November elections as growth will stay "painfully slow" in the months ahead, said Nigel Gault, an economist at IHS Global Insight. Major problems caused by high unemployment and heavy consumer and mortgage debts will take time to resolve.

While it was clear to most economists even before the committee announcement that a recovery began last summer, Mr. Gault said, the economy remains far from normal and could suffer setbacks. He put the odds of a double-dip recession at one in four.

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