As noted yesterday, the Pew Research Center's latest survey shows the majority Americans don't think the recession that began December 2007 - the Great Recession, as some call it - is over. However, those who measure such things for a living point out that the recessionary trough was long ago reached, and that gross domestic product has been in positive territory since last summer, after four quarters in the red.
The National Bureau of Economic Research, whose word the experts accept as official regarding beginnings and endings of recessions, has yet to call this one over. But the NBER always takes its time when making such declarations. Sometimes it delays its call of the beginning or end for as long as 18 months just to be certain "the existence of a recession is not at all in doubt." For instance, the NBER did not declare that the current recession began in 2007 until December 2008. As of two months ago, the majority of eight panel members who make such decisions said an announcement that the downturn is definitely over would be "premature."
One member dissented publicly. Robert Gordon, a professor at Northwestern University, said the U.S. economy “is enjoying strong upward momentum that is evident every day in the announcement of retail sales, service-sector production, and almost everything else.” But, in line with the other seven members' views, the situation has become a good deal murkier since April when Gordon objected to the panel's hesitance.
Economic numbers have remained decidedly mixed. Leading economic indicators have weakened. Growth in manufacturing is still positive, but it's slowed down. Retail sales are still better than last year but have lost the intensity they had in the first quarter. Motor vehicle sales are up, but only compared with the terrible results of the past two years. Even General Motors noted today it wasn't happy with the results. And, as noted, GDP is up for the third quarter in a row, but at 2.7 percent, it's considerably lower than when first announced. Look at another dozen recurring gauges and you'll see a similar pattern, some up, some up but losing momentum, some down. As noted: mixed, murky, uncertain.
From one perspective the news has not been good at all. Jobs. Yes, yes, I've been harping on jobs for the past 18 months. There's a reason for it. While the job hemorrhage has stopped thanks in no small part to the stimulus jolt provided by the American Recovery and Reinvestment Act, only a tiny fraction of the millions of people who lost their jobs or got their hours cut or took furloughs or found part-time positions have returned to something approaching normal. While we've been tingled with predictions the situation will soon get lots better, this has yet to come true. Given the consensus reading of what will be announced in tomorrow's monthly report on job creation for June, it's unlikely there will be an encouraging uptick on that score. The can will just be kicked down the road to August 4, when the next report comes out.
What's more disturbing than the steady drip drip drip of weak job news is that there are hints we could be headed into a recoveryless recovery. Or rather a "double-dip" that might have the NBER declaring the old recession was over last summer on the same day they announce that a new one started in, say, December 2010.
Three months ago, the double-dip talk that was fashionable in mid-2009 had practically disappeared from economic discourse. Now, it's acquired fresh cachet among many experts, not least because of all the talk about the alleged need for austerity. Not austerity for the bailed-out big banks that are again wallowing in vast corporate profits and renewed executive bonuses. Rather austerity for state and municipal governments already laying off teachers, shutting down DMV offices two or three days a month, shuttering public parks and eliminating recreation programs in inner cities. Austerity for the millions who have been out of work for longer than any time in the post-Depression era.
Both Paul Krugman and Barack Obama, not exactly the closest of friends, have challenged the idea that austerity is what's needed now. But in Europe as well as the halls of the U.S. Congress, the deficit worry-warts seem to be gaining the upper hand. So what happens when you impose austerity in the midst of a tepid recovery? You risk heading downhill again. Bad news for everyone and extremely bad news for those who haven't yet emerged from the wreckage of the current downturn. There is something worse than just limping along: plunging back into negative territory.
But is a double-dip recession really on the horizon?
The keen-eyed Barry Ritholtz at the Big Picture has his doubts.
Consensus: I cannot recall the last time a) so many people were projecting a recession; b) the crowd got it right.
There seems to be a consensus that a double dip is likely. Most everyone is arguing that [Economic Cycle Research Institute]'s weekly leading index supports a double dip. Everyone, that is, except for ECRI themselves. Hussman and others argue from a sample set of 7 recessions, and while I do not disagree with using historical data, we are constrained by having a mere century’s worth. Its better than nothing, but only marginally so.
The worst thing about being mortal is that we won’t be around 1,000 years from now. By then, we will have a sufficient data set to draw better supported conclusions as to what, if anything, historical data projects about markets and the economy.
None of the speculation about where the economy will go in the immediate future, whether this is educated and data-driven or simple guesswork by total amateurs, obviates the fact that we have chronic, structural economic problems which outweigh the acute one now afflicting us. We can't wait for a thousand years of data to do something about those.