No Need for Jobs: The Recession is Over

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Recession Deals, Going, Going, Gone (Source: AP)

Good news for everyone who has been out of work for months, facing foreclosure or generally struggling to make their bills: The recession is over. The bad news: It has been for a while. The National Bureau of Economic Research, which is the organization that officially designates when a recession starts and when a recession ends, announced today that the Great Recession officially ended in June 2009. Does that mean unemployment will drop anytime soon? Probably not. The weird thing about the NBER is that by its own admission it doesn’t wait until the job market turns around before it calls the end of the recession, from the NBER’s statement:

Second, in previous business cycles, aggregate hours and employment have frequently reached their troughs later than the NBER’s trough date. In particular, in 2001-03, the trough in payroll employment occurred 21 months after the NBER trough date. In 2009, the NBER trough date is 6 months before the trough in payroll employment. In both the 2001-03 and 2009 cycles, household employment also reached its trough later than the NBER trough date.

So what did we learn from today’s “End of Recession” announcement?

Even if it feels like they called it early, the NBER, at least by feel, seems to have gotten one thing right. This recession was/is/will be longer than any in the post WWII period. By the NBER’s calculations, this recession lasted 18 months. That was two months longer than both the recessions in the mid-1970s and the one that started in July 1981.

For some the question is how long will it be until the NBER announces we are back in a recession. The last two times we have had double dips, the recession started 36 months later in the mid-1970s, and 12 months later in the early 1980s. The good news is that both of those times the earlier dip was a short one. So it could be that the length of this recession means that we will escape without a second leg. Let’s hope for the best.

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