Tuesday, November 16, 2010

The Recession Ended Last Year

Most people I talk to don't seem to understand that the recession ended last June. The media doesn't help as various articles go on-and-on about how horrible this recession was, comparing it to The Great Depression, even though the 2007-2009 recession was more like the 1981-1982 recession in terms of length and severity. Whenever I look at economic indicators, I can't see how anyone could think that we're still in a recession. I think the New York Times has the best graphical depiction of economic indicators, which can be found in the right column of their Economix blog. Take a look and tell me what you think. Here is a snapshot of the current numbers

  • Number of jobs: +0.8 million (vs. prev. year)
  • Durable goods orders: +13.4% (vs. prev. year)
  • Manufacturing index: 56.9 (> 50 indicates expansion)
  • Personal income: +3.1% (vs. prev. year)
  • Personal saving rate: 5.3%
  • Gross Domestic product: +2.0% (vs. prev. quarter, annualized, seasonally adjusted)
  • Industrial production: +5.4% (vs. prev. year)
  • Real hourly earnings: +1.2% (vs. prev. year)
  • Consumer price index: +1.1% (vs. prev. year)
  • Retail sales: +7.3% (vs. prev year)
  • Producer prices: +4.0% (vs. prev year)
Of course, I've skipped all the housing numbers because the U.S. created a tremendous bubble then tried to re-inflate the bubble with a tax credit that expired earlier this year. Of course housing numbers are down and it will take years before they look up again. I hope the U.S. will learn that the best way to avoid the after-effects of a bubble is to not create a bubble in the first place. But, I'm not holding my breath. And, of course unemployment is still high. It always takes years after a recession has ended to bring the unemployment rate down. Anyway, the above numbers paint a clear picture to me: the U.S. is in an expansionary period. If you consider the indicators, the economy has clearly been expanding for over a year, as NBER has announced.

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