Yay! Economists Polled By WSJ Declare Recession Over
A panel of wizard-hatted forecasters consulted by The Wall Street Journal has declared the recession officially over. But don't break out the champagne just yet — unless you're one of those gilded bankers we mentioned earlier. "We are in a technical recovery, but risks remain abundant," Diane Swonk of Mesirow Financial told the paper. "It will still take some luck and skill to get Main Street to feel some of the relief Wall Street has felt."
Of the 51 economists consulted by the Journal, 40 said the recession was over. However, they still expect the unemployment rate to go as high as 10.2% before dropping again, and expect the rate to hover above 9% until at least the end of next year. Six economists put the unemployment rate at 10% or higher as far out as next December.
So, what kind of recovery is this, without any job growth? One economist highlighted the "export sector" and "consumers spending more freely" than expected. We're not sure which consumers they're talking about, since most recent data show consumer spending remaining weak. Then again, maybe they mean the ones getting the million-dollar bonuses that Newsweek mentioned.
Post a comment
Comments:
@whysteriastar: Think about that number for a while and think what it would mean if one of the world's top 10 economies (California alone) had 40% unemployment.
Yay! Someone tell the owners of my company. Maybe they can put the 401ks back to matching 5%, give us our cost of living increases this year and bonuses we usually get in Dec. Nevermind the fact we never actually slowed down, and business was actually booming this year.
I live in northeast Ohio near Cleveland part of the Rustbelt. When your economies rely on steel and auto manufacturing the recession isn't over by a long shot. The problem is getting people to realize the recession for us started years ago. My little city of Elyria is dying.
Are these the same economists that never saw the recession coming in the first place?
@Saboth: Buisness logic says to cut even when cuts aren't necessary- but you can get away with them. In this, they'll say "you're lucky to have a job!"
What they're really doing is undermining all the social good-will they've generated in the business. They've removed the veil and shown you that you're not a member of a team or building a business, but just a part with an assigned value.
In that, eventually people will leave for greener pastures when the opportunity arises. People's work ethic will be shattered because is up and it's unlikely there will be layoffs as the employees have to be kept.
Reduced productivity is the result, and the business will see a worse product go out the doors when the whole process could've been avoided by someone simply allowing the employees to keep the 401k matching (if trends/projections justified the increased risk in spite a down economy) and bonuses. This is a great opportunity for the business to save some cash as they don't have to provide raises. All they have to do is look better than everybody else. When everybody else is cutting wages and reducing benefits, all you have to do is let people keep what they have and the business looks like a positive place to work.
@whysteriastar: I believe the most recognized rate which includes people no longer looking is likely to hit 20%. Nothing like that should hit us nationally, but then national numbers mean squat if you can't easily move.
Anyone selling knows their tude can be self-fulfilling, and WSJ has a very deep supply of rose-colored glasses.
@whysteriastar: Actually it's around 12%. Some argue that that number doesn't include "discouraged" workers, which I guess could push it over 15% or even higher. But not 40%. Even during the worst of the Great Depression, unemployment rates didn't approach 40%.
@HiPwr: But recession is such a bad word. We prefer "a brief period of economic contraction."
And don't try any of that tough, small-scale effects Kung Fu. We're well versed in "The Sun Will Come Out Tomorrow" defenses.
Of course we're not in a recession. We're in a dead cat flop of a downward spiral.
@pschroeter: OMG Elyria? I'm on the other side of Cleveland but my parents live near there (N. Ridgeville) and, yeah, that place is drying up QUICK.
The Greater Cleveland area has, on a whole, been widely insulated from this particular economic bust, as well as most others. This sounds great, but the problem is that we are widely insulated from every ecenomic boom as well, and lack the leadership to reinvent our economy beyond manufacturing/being a steel town. So as the manufacturing sector of America dried up slowly but surely, so does our economy.
@HiPwr: Everybody and their uncle was saying that housing was on a huge bubble and that it was only a matter of time before it bust and took the economy with it... greedy individuals kept riding it for all it was worth, though.
@HiPwr:
Most people educated in economics saw this coming. You had the rare outliers with some obscure economic theory who truly believed there would be no recession, and then you had the people who denied it would happen "I'll flip just one more house".
Housing was a double whammy. Home prices had increased exponentially from 2000 to 2006, which was a sign to logically people it was a bubble. On top of that, you had many people who took advantage of alternative / no credit check loans to take advantage of the surge in home prices. What happened was the housing bubble popped, and prices fell, which left many people underwater...which wouldn't have been a problem except that many of these people had adjustable rate mortgages, or were counting on refinancing to get cash to pay other bills. Bills went unpaid, the house was foreclosed, resulting in even LOWER home prices.
You're confusing economists with "stock market experts, wall street insiders, and talking heads". THEY didn't see it coming, because they weren't even looking
Can we buy derivatives and CDO's against the statements of these media criminals? I bet if they were financially responsible for their so called journalism, they would all STFU! They are as much to blame as the Wall Street traders who manipulate the systems.
That explains why I'm still among the unemployed, troll 8 job sites twice each day, and sending resumes like there's no tomorrow. Nevertheless, the ivory tower resident eggheads have spoken; the rest of us, the 16% jobless (estimated actual figure), must be wrong/uninformed/misguided/living in an alternate reality.
@HiPwr:
No, they're the same economists who said six months ago the recession was over.
Don't worry, they'll keep saying it until they get it right.
I think they mean we are like 1 minute past the bottom of the trough. But that still gives us 7 years of a long uphill road. :p
Economists? ... LMAO
@wrjohnston19283: It's odd that you say that, because Paul Krugman recently had an article in the New York Times saying exactly the opposite.
Wall Street may not have been looking, but there seem to have been more than a few economists who simply didn't believe it was possible.
I'm not waiting for job growth. I'd be happy just to get back the jobs that were lost in this recession. What's the saying? When you're out of work it's a recession but when I'm out of work it's a depression.
Honey, you are wrong. In the DEPRESSION of the 1930s the highest unemployment got was 35%. You listen to Rush too much.
In the Great Depression unemployment never got much higher than 33% so saying California is 40% in a recession is wrong.
The recession isn't over until I have a job.
[6 months and counting...]
A jobless recovery is NOT a recovery and anyone who says it is is an economic terrorist. I am SO SICK of the corporate and repugnican war on the working class and on the media's collusion.
But I guess this is what the country as a whole gets for watching while businesses outsourced outsourced outsourced and sat there saying nothing, continuing to buy from those businesses like nothing was wrong, and going along with the "global economy" lie.
This is nothing but an economy of violence on workers and consumers. Welcome to the rush to the bottom!
@H3ion: Sorry to be a downer, but those jobs aren't coming back. They were assassinated, as were the economic futures of the workers, through outsourcing to people in a far off land that don't speak english and get paid a tenth as much.
Will there be a parade?
@Dacker: Hang in there, Dacker. I was out of work for over a year before I found my job and I did find one. It sucks, I know.
Are these the same economists that said there was no recession when it had already begun?
It might well be that businesses that have shed jobs to scale down to the economic level we are at have succeeded to do so, and managed to avoid bankruptcy. To those businesses, the risk might well be over. But to the nation as a whole, there is a lot more recovery that needs to happen.
I for one will not call it over until total dollars paid out in salaries and wages is back to the highest it once was times the rate of growth since then.
@Saboth:
My company has taken all the same measures. They're taking advantage of the fact that most of us have a "just happy to have a job" attitude right now. If it weren't so hard to find another similar-paying job, most of us would leave, I suspect.
@savdavid: In the Depression of 1929 and the 1930s you mean? BTW, back then they measured unemployment as a percentage of people actually out of work. Now days, they measure unemployment based on how many people have applied for unemployment benefits AND have not run out of benefits. Basically, it shows about half of the reality. Look at the "U-6" report from the Bureau of Labor Statistics to get something closer to accurate.
Unemployment is always a lagging indicator. But there is also know sign that employers want to start hiring again. It's over for Wall Street. But the rest of us are still in recession.
DOWn, baby, DOWn!
Thanks. What really sucks is that this is the 3rd time in 3 years for me. I've been unemployed for 23 of the last 36 months.
"Momma's, don't let your sons grow up to be ENGINEEEERS!"
After 25 years, a career in high tech can really suck if you need stability.
@Skaperen: Unemplyment rates are derived from survey, not from those on benifits as everyone seems to think is the only possible way to figure out unemployment.
[www.bls.gov]
These are the same economists who missed the '01 crash, the '05 crash, and the '08 crash - not a good century so far for economists.
@Trencher93: Which economists, though. That's like saying, "All banana chocolate malts are delicious" when you're studiously avoiding McDonald's ones.
If the economists you rely on are rah-rah cheerleaders, perhaps it's time to change the ones you rely on.
@WillB: Agreed. Even companies that are doing well are using the general economy as an excuse to cap salaries, no bonuses, no promotions, etc. As soon as the job market improves, you better believe that people will start looking to leave. So, in the end, it's probably worse for them to operate this way. Unfortunately, most companies don't see past the next fiscal quarter, let alone fiscal year.
@acutusnothus: It's been happening for years. Stock Market, Productivity, and GDP are all that matter. Don't worry about unemployment and salaries.
@Areyouagoodlittleconsumer: Hate to say it, but its true. I think we're going to see a continuing stratification of jobs and classes. You're have the very top and a growing underclass of people who can only work retail and quasi-retail service jobs. Of course this economic model relies on heavy consumer spending, which isn't sustainable if nobody makes enough money to spend on anything but necessities.
@Dacker: According to the Ayn Rand, tt means you're lazy, irresponisble, and not trying hard enough. You need to take responsibility for your failures.
/snark
Hang in there. I know its tough. What makes it worse is the "lifeboat" mentality. You take any job because you need a job. But they're often not stable, well-suited, etc. and suddenly you're out of work again. Now your resume looks like you're finicky, when you're really just trying to put food on the table. The good? news is the companies are seeing this more and more and so you're not viewed in that light as much compared to the rest of the workforce.
@Skaperen: It can create self-perpetuating recession. Think of it this way.
1) Economy goes bad
2) Companies cut jobs
3) People stop spending
3) Companies save money and improve their bottom line.
4) But, since people stopped spending because they lost their job, economy goes bad again.
yea, gotta hand it to wall street analysts. SO far out of touch with reality it's not even funny. Wait till unemployment reaches 35%. I am sure the economy will still be "recovering" then!
sarcasm=off
The number of unemployed is what's called a lagging indicator. This means that there will be many other signs of economic recovery before companies once again start hiring in large numbers.
I've printed out the article for reading later, so I can't comment on the entire thing, but i've glanced over the first few pages.
-I'll concede that very few people saw the severity of any of the crisises, be it the stock market's 50% plunge from Nov 2007, to the housing crisis (although in 2006 I remember calling my parents to complain about people who Businessweek had quoted admitting they signed mortgage documents they didn't understand, and telling my parents this was going to get much worse before it gets better), or the banking systems near collapse.
-Alan Greenspan and Ben Bernake are "political" economists. While they aren't elected, they do need to be careful in what they say as not to cause a panic, which will make things worse. They may expect a 50% stock market decline, and state "There is a chance of a medium term stock market correction".
Capitalism has no imperative to create jobs. Hiring humans is a necessary evil and only done as a last resort.
@swonder911: I agree, up to until a few months ago here in Texas, the effects were not felt as bad until the start of the year, when refineries started to curtail operations, lopping off a bunch of contractors and employees.
They have yet to bring those refineries back on-stream to produce much-needed fuel for operations.
Foreclosures were not as bad, but when oil fell and the refinery shutdowns, it dropped into the pot. Texas will recover sooner due to the varied resources needed by the nation (cotton, produce, beef, oil). I feel bad for Michigan and the Northwest territories.
@Princess Leela: It also doesn't include people in prison, which could push it up even higher. Several countries in Europe count imprisoned people as unemployed. I haven't made up my mind about this yet.
@whysteriastar: I attended a seminar over the weekend by an economist who stated: "the recession isn't defined by the number of unemployed but by the actions of the employed."
I heard California's unemployment rate is something like 40%, that doesn't sound over to me.