On Monday, the National Bureau of Economic Research announced the recession ended in June 2009. NBER is a nonprofit group appointed by the government to examine business cycles and long-term economic growth. The recent report was merely to mark the dates of the business cycle in question, not to give a thumbs up to overall economic conditions. NYBER reported that the period of decline (starting in December of 2007 until June of 2009) was the longest since World War II. The report did not confirm that the economy has returned to operating at normal capacity.
Most Americans have cut spending to reduce their debt or increased their savings, and the unemployment rate remains high. Banks are not giving loans to small businesses to expand operations or create new jobs and businesses are not spending money. Meanwhile, the President’s proposed health care and tax reforms remain uncertain. According the NBER report, an expansion started in June of 2009 when economic activity began to rise. Regardless of the expansion, the overall population is waiting to exhale. Growth and recovery have yet to flow evenly across the board.
Obama commented on the report at a CNBC forum in Washington saying, “Even though economists may say that the recession officially ended last year, for the millions of people who are still out of work, people who’ve seen their home values decline, people who are struggling to pay the bills day to day, it’s still very real for them.”
According to NBER, in both recessions and expansions, brief reversals in economic activity may occur. A recession may include a short period of expansion followed by further decline; an expansion may include a short period of contraction followed by further growth. CNNMoney surveyed top economists who calculate that there is a 25% risk of a double-dip recession within the next year. This figure is up from a 15% chance just six months ago.
The NBER report acknowledges the risk, but said “the committee decided that any future downturn of the economy would be a new recession and not a continuation of the recession that began in December 2007.”
Since NBER reflects on past business cycles, if a business or individual has generated more money, obtained financing and economic expansion since last June, then the NBER validates your experience. Congratulations and I wish you continued luck. For those of us that are waiting to exhale, I wish you a speedy recovery. We won’t know until the other shoe drops.
Candi Sparks is the author of the “Can I Have Some Money?” books series.