It may not seem like it, but the Great Recession is officially over. In fact, a panel of academic economists says it actually ended back in June 2009.
It may not seem like it, but the Great Recession is officially over. In fact, a panel of academic economists that dates when economic downturns begin and end says it actually ended back in June 2009.
Of course, that is small comfort to those who are still suffering from the ill effects of the 18-month-long recession. Unemployment in the U.S. is currently at 9.6 percent, those who are working are seeing little, if any, increase in their wages (in some cases, they have to take significant pay cuts), home values are weak and the foreclosure market is the worst in decades.
President Obama points out the recession is still “very real” for those whose economic struggles continue. “The hole was so deep that a lot of people out there are still hurting,” Obama said. “Something that took 10 years to create is going to take a little more time to solve.”
So just how did The National Bureau of Economic Research determine the 18-month recession ended last summer? The economic panel, notoriously cautious about declaring the beginning or end of a recession, based their assessment on reviews of income, employment, industrial activity and the nation’s gross domestic product figures (the total value of goods and services produced within the U.S.).
Despite the proclamation, the NBER admits the country’s economic outlook isn’t uplifting. “The committee did not conclude that economic conditions since that month have been favorable or that the economy has returned to operating at normal capacity,” the panel said in a statement. “Economic activity is typically below normal in the early stages of an expansion, and it sometimes remains well into the expansion.”
Economists believe a “double-dip” recession is a possibility, though the probability of that greatly varies depending on who you ask. Some put the odds at a 20 percent chance, while others go as high as 40 percent.
What many financial experts do agree on, however, is that the U.S. government needs to focus on job creation, not deficit reduction. Public opinion polls have shown the rising deficit is a top concern with many Americans, and Republicans have been making it a campaign issue this election season. However, on Thursday, a statement signed by more than 300 economists and policy experts warned Congress to avoid the disastrous path our ancestors took in 1937.
“History suggests that a tenuous recovery is no time to practice austerity,” read the statement. “In the Great Depression, Franklin Roosevelt’s New Deal generated growth and reduced the unemployment rate from 25 percent in 1932 to less than 10 percent in 1937. However, the deficit hawks of that era persuaded President Roosevelt to reverse course prematurely and move toward budget balance. The result was a severe recession that caused the economy to contract sharply and sent the unemployment rate soaring.”
As the GOP voices a great need to cut down the deficit and eliminate wasteful spending, they have also been strenuously resisting Obama’s call to allow Bush-era tax cuts for households earning more than $250,000 per year to expire at the end of this year, and to extend the tax cuts for those earning less than that. According to Obama, extending the tax cuts for the top 2 percent of Americans would cost $700 billion over 10 years.
Most of us can only dream of someday having a household income that even comes close to $250,000, but I think we can all agree that those who do earn that much aren’t the ones who are having trouble making ends meet. Letting the tax cuts for them expire and funneling the money saved into creating jobs seems like a no-brainer to me.
But this is an election year, and if Democratic leaders aren’t able to garner enough votes for their bill, then Congress may be faced with the choice of extending the tax cuts for all Americans or letting them lapse altogether. So, if reason doesn’t prevail, it may just come down to letting the rich get richer so the rest of us can get some much-needed help.
City editor Amy Gehrt may be reached at email@example.com. The views expressed in this column are not necessarily those of the Pekin Daily Times.