Recession is a technical term that technically does not apply to what the U.S. is at the moment going through. The economy is still in a terrible condition even though June 2009 was when the government said Monday the economic downturn officially ended. The economic downturn began in December 2007 and lasted for 18 months — the longest slide since World War II. The economy’s prolonged freefall had earned it the title of “Great Recession” long before it was officially announced over. The economy is growing, but that does not mean it can be back to normal anytime soon. Meanwhile, the Federal Reserve is seeking to keep away from a “growth recession” in which economic expansion is too slow to stem rising unemployment.
Recession like Depression
The National Bureau of Economic Research states that the longest economic downturn since the Great Depression finished last summer when the economy started to grow again. The Los Angeles Times reports that a relapse, or double-dip, would be a new recession. The Great Recession is second to the Great Depression in length. The Economic downturn was only 18 months even though the Depression was between 1929 and 1933, making it 43 months. There were two recessions tying for 3rd place. These were in 1973-75 and 1981-82. More than 8 million people lost their jobs, and also the labor market could take years to recuperate. The NBER said probably the most damaging factors in this economic downturn was rapid productivity expansion, which deleted jobs as output was marginally sustained.
Paper end to Recession
The expansion that is being seen may not be enough to do anything, claims NBER. NEBR defines a recession as, according to the Washington Post, “a period of falling economic activity spread across the economy, lasting more than a few months, normally visible in real gross domestic product (GDP), real income, employment, industrial production, and wholesale-retail sales.” According to the panel, GDP and industrial production bottomed out in June 2009. Employment, however, did not begin expanding until December 2009. Conditions getting better aren’t a requirement for the recession to be over. This is what the NEBR said.
Anatomy of a growth recession
The growth economic downturn is shown as the unemployment rate weakens even though the economy expands. According to Bloomberg, In the first quarter, there was a 3.7 percent growth while it dropped in 2010’s second quarter to a 1.6 percent annual rate for economic expansion. Numerous were excited when they heard the fourth quarter of 2009 showed a 5 percent rate of growth. The consumer spending needed to strengthen the economy isn’t occurring with the unemployment rate at 9.5 percent. Fed chairman Ben Bernake says the economy may be healed. This would take tools the agency has. With interest rates near zero, some think the next step for the Fed is to purchase more Treasuries, or government debt. Numerous people think that people just need jobs. This would help America’s economy a lot.
Further reading
Los Angeles times
latimes.com/business/la-fi-recession-20100920,,4014811.story
Washington Post
voices.washingtonpost.com/political-economy/2010/09/its_official_the_great_recessi.html
Bloomberg
bloomberg.com/news/2010-09-19/escaping-double-dip-to-growth-recession-means-no-unemployment-relief-seen.html
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