Your Take: Are We Out Of The Recession?

October 30, 2009 by Jim

2.cdn.turner.com/money/2009/10/29/news/economy/gdp/chart_gdp.03.gif" class="r" alt="CNN Money GDP 2009Q3 Chart">Yesterday, the Department of Commerce reported that the annualized GDP (gross domestic product) grew to 3.5% in third quarter. This is significant because, by definition, a recession is two straight quarters of shrinking GDP. A 3.5% increase in GDP would mean, at least technically, the recession was over. Four straight quarters of negative GDP growth, the worst of which was the first quarter of 2009 (-6.4%), has finally come to an end.

Hooray! Right?

Unfortunately, no one living in the real world cares much for technicalities. Millions of jobs have been lost, with hundreds of thousands more each month, and so I don’t think many people feel like the recession is over even if the bean counters say so. One positive sign is that the growth beat expectations by 0.3%, which isn’t a bad thing.

Two things worry me:

  • How much of the recovery was the result of various government programs meant to stimulate consumption? We had all the bailouts, cash for clunkers, first time home buyer credit, and several other programs that cost billions. People are still being laid off at the rate of hundreds of thousands a month, unemployment for September 2009 was 9.5% (not seasonally adjusted), and people without jobs tend to spend less (duh). Is this sustainable?
  • Check out the 2nd quarter of 2008. In the 1st quarter of 2008, we saw a negative GDP growth figure. Then we “pulled out” of a potential recession in the 2nd quarter only to fall back into the trenches for a full year.

So, while we’re technically out of the recession, does it feel like we’re out of the recession? What do you think?

(Source: CNN Money)

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