Is the recession over? Some like to think so
According to the National Bureau of Economic Research, the recession has been over since June 2009. I guess the rest of us are just living in a dream world where jobs are being lost day after day and the cost of everything is rising. Maybe it is only a matter of time when everything will be back to normal, but one can never be too sure.
NBER states in their report that just because the recession is over does not mean things are back to normal. One point they make is that economy stopped contracting and expansion began. National Bureau of Economic Research defines recession as “a period of falling economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.”
Their definition seems to conflict with their own report. How can there be recovery if there is such high unemployment rate still? One wonders about the authenticity of such claims.
Technical terms versus the real world
By their own definition of what a recession is, it would seem that they are contradicting themselves with the report of economic recovery. One of the main reasons is due to high rates of unemployment in the United States. According to the U.S. Bureau of Labor Statistics, the average unemployment rate is currently at 9.6 percent! At the time recession began, the national average rate of unemployment was merely 4.8 percent. Just at the beginning of 2010 it reached 10.6 percent. Some of the harder hit areas must be experiencing jobless rates of epic proportions.
After looking at publicly available data, how can there be a report stating that the economic recession is over? One can only wonder. There is one major reason such reports could be coming out and being publicized.
Self fulfilling prophecy
Have you ever wondered why every President wants people to believe that the economy is doing great and that a massive number of new jobs have been created? It is due to what is known as the self fulfilling prophecy. If people do not believe that our economy is getting back on track, they will keep hoarding money and not do any hiring. This leads to the economy getting worse and leading to many problems. Even if things look bleak, it is in the best interest of our country’s leaders to keep pointing out how great things are going.
What the general public wants to see is data on jobs. Despite how the economy is doing, it does no good to people if there is a lack of jobs. What such reports as the one from National Bureau of Economic Research do is keep people’s hopes up. If the economy has started expanding again, jobs will eventually follow in due time.
One question to ask here is, if we are on our way back to recovery, why have we kept losing so many jobs ever since June of 2009? Almost everyday there are conflicting reports in the news about what is happening. One day you might the headlines stating how jobless rate has gone down; the next day the same source might report that the highest number of people have applied for jobless claims.
It is a roller coaster of emotions and reports. The bottom line is, nobody really knows what is happening. Only thing we can hint at is that the economy is not as bad as it was two years ago. There is still a lot of uncertainty and people do not know how to react. Unless we keep witnessing positive results month after month, we will be skeptical of such reports.