The $14 Trillion Question
Times like these can test an economist's mettle. Since everyone seems to be interested in hearing the answer to one question, namely "Is the recession over?", it helps when you can give with some degree of confidence a reply of yes (or no). Moving from recession to recovery is not a process that follows a pre-determined script; however, recent economic data have made the task of identifying business cycle turning points even more complicated for people such as myself and only help to reinforce the caricature of the two-handed economist.
For example, some key indicators have begun to improve (industrial production and homebuilding), but other series such are bouncing around cyclical lows (retail sales) or simply getting 'less bad' (payroll employment). Although all of these indicators need not show growth at the same time, the up-and-down results only muddy the waters when trying to assess the current economic situation. The NBER, which serves as the U.S. recession referee, may indeed trace the beginning of the recovery to July 2009 but others such as James Hamilton of Econbrowser see enough problem areas so as not to make the call. In the end, entering an economic recovery means less than staying there, especially when the Federal Reserve begins to take away the punch bowl or when the federal government realizes it doesn't possess unlimited resources.
08-14-2009 4:03 PM