Time to rev up after recession? Maybe not.
It’s no surprise that American voters think the economy is an important issue for this year’s elections. For 57 percent of registered voters the economy is a very important issue, with 46 percent rating unemployment, according to a USA Today/Gallup poll. Compare this with a 40 percent rating for the Afghanistan conflict, and only 22 percent for global warming.
Today, a top panel of academics refused to say the recession ended. The National Bureau of Economic Research (NBER), a nonprofit in Cambridge, Mass, said that they have inconclusive data to declare the cycle over (statement). This does not necessarily mean the recession is continuing, but that it’s too early to tell conclusively.
NBER’s Cycle Dating Committee is the nation’s authority for dating recessions, according to the Wall Street Journal. A recession, as they define it, is a period of prolonged negative economic activity, lasting more than a few months.
NBER has dated the recession’s beginning at December 2007, and several economists suspect the recession formally ended last summer. Still, the committee uses caution when dating the end of a recession. For instance, NBER waited until July 2003 to declare the 2001 recession’s end date, way back in November of that year.
NBER probably uses caution because of its status. Governments and businesses watch NBER’s forecasts to make investment decisions. NBER knows this and does not want entities to spend based on faulty proclamations. NBER waits for complete information, even if it means they are years behind.
So what if the recession is over? Is it time to bank on that six-figure salary after college? Should mom and dad give you more spending money? Can the Washington Metro Area Transit Authority slash fares? The answer is no.
But let me approach the issue from a different angle. Since 2008, the government has justified its economic policies by saying they provide stimulus. The Troubled Asset Relief Program (TARP) was suppose to make banks lend again. The American Recovery and Reinvestment Act (known as the Stimulus) funded several economic initiatives directly. Now, there are signs the recession is ending, and it may be time to reexamine these policies.
How will you know the recession has ended? Will you reexamine your spending habits? Should our government do the same?
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