Thursday, August 13, 2009

Recession Declared Over; Let the Expansion Begin

WALL STREET JOURNAL -- The majority of the economists The Wall Street Journal surveyed during the past few days said the recession that began in December 2007 is now over.

After months of uncertainty, economists are finally seeing a break in the clouds. Forecasts were revised upward for every period, with 27 economists saying the recession had ended and 11 seeing a trough this month or next. Gross domestic product in the third quarter is now expected to show 2.4% growth at a seasonally adjusted annual rate (see chart above) amid signs of life in the manufacturing sector, partly spurred by inventory adjustments and strong demand for the "cash for clunkers" car-rebate program. Economists expect GDP growth to remain above 2% at an annualized rate through the first half of next year (see chart above, survey data here).

MP: Welcome to the economic expansion of 2009, the 12th economic expansion in the U.S. economy since WWII.

Originally posted at Carpe Diem.


At 8/13/2009 9:46 AM, Blogger Fishsticks said...

I hope they didn't survey the same economists that didn't see the four quarters preceding the forecast.

At 8/13/2009 9:55 AM, Anonymous GregL said...

The economists are almost all business economists. That is a non-random sample of economists. Since we are talking about forcesting turning points (a difficult task), I would think a better sampling method would be choosen.

Might there be upward bias?

At 8/13/2009 10:04 AM, Blogger bobble said...

woo hoo, we hit bottom

At 8/13/2009 10:07 AM, Anonymous Anonymous said...

While I would love to be optimistic about growth, I'm not seeing it.

I don't believe we've turned the corner on unemployment. This will not be a "jobless recovery" because there is no such thing. It is not possible to have more than a quarter or two of growth without job growth.

I don't believe we've turned the corner on real estate. Yes, a larger number of sellers are repricing their homes at realistic levels, but I believe we are facing two more years of a high foreclosure rate as the ten year interest only leaders expire.

Of course, Congress isn't helping by sucking all the wind out of investment and venture capital. Someone who makes $5-10 million per year could easily keep my team of software developers working on great software with just 5% of their income. Unfortunately, Congress is hell-bent on taking that 5% for themselves and they are none to subtle about letting the investor class know that.

So, to recap, I think unemployment will get worse before it gets better. I think we have two more years before we see the bottom of the housing market. And I think job-creating venture capitalists will continue to stand around with their hands in their pockets.

At 8/13/2009 10:10 AM, Blogger Unknown said...

job creation and unemployment are always lagging indicators

At 8/13/2009 11:07 AM, Blogger Dean L said...

Job creation and unemployment may lag, but consumer spending doesn't. Foreclosures don't. Excess capacity doesn't.

Recovery stall?

I think it's still too soon to declare the recession dead.

At 8/13/2009 11:30 AM, Anonymous gettingrational said...

Consumption is about 70% of GDP so where will new sources of funds come from to consume? Home Equity Loans, better paying jobs, inheritences or more government benefits? It is delusional to think that spending by consumers will lead us to a recovery that is V shaped with the massive deleveraging that is happening.

The only answer is to increase GDP by Production for more jobs with better pay. Where is the market for the increased production? EXPORTS to fair markets for U.S. Goods and Services.

This will require very hard work and a new way of thinking of where the customers are for Team U.S.A.

At 8/13/2009 12:47 PM, Blogger Angie said...

Mr Perry, what would the GDP be if government spending hadn't grown so much?

At 8/13/2009 12:50 PM, Blogger Mark J. Perry said...

Angela: Once the BEA releases GDP data for Q3 and beyond, we'll know exactly how much of the growth in real output was due to govt. spending.

At 8/13/2009 3:39 PM, Blogger juandos said...

Yeah, one can almost smell how the recession is receeding...

Foreclosures rise 7 percent in July from June

How will the recession even end when you have members in Congress have a less than tenuous grip on reality?

At 8/13/2009 10:08 PM, Blogger moneybagzz said...

My concerns are that Obamacare, higher taxes and increased regulation (Cap-and-tax, Value-reduction tax, and practically anything else that Congress and the White House can come up with) will mute or even retard the return to economic growth.

I suspect that somewhere, former President James Carter is exhaling a sigh of relief that Obama will go down in history as worse than Carter.

But I would not mind at all if he became a free-market, low-tax, light-regulatory touch conservative.

But then again, I could get tapped on the shoulder to direct a reboot of the entire Star Wars series of movies. Like that's going to happen in this century.


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