We Never Really Got Out of The Great Recession

by Justin Weinger on September 2, 2011

As you’ve read here several times (It’s Not a Double Dip, It’s a Depression?, 10 Signs We’re Headed for Another Recession – Or That The Last One Never Ended), I truly believe we never left the Great Recession.

Sure, in the very broadest technical definition of the word we left The Great Recession because our GDP turned positive, and the National Bureau of Economic Research declared back in September 2010 that the recession ended in June 2009.  But, again, their definition of a recession is based on a very technical parameters, mostly centered around economic growth, no matter how fake or unsustainable it may be.

The reason I bring this last point up is because most of the economic growth we saw in late 2009 through 2010 was based mostly on deficit spending – i.e. the Federal government spending money it didn’t have in the hopes of jumpstarting the economy until the private sector and consumer has recovered enough to sustain the growth.

Unfortunately, the part where the private sector and consumer spending picks up didn’t happen and isn’t going to happen for a really long time:

  • Unemployment is still pretty much at the same level as what it was during the Great Recession
  • Housing prices are pretty much at the same point as what they were when the market “bottomed” in the midst of the Great Recession
  • Credit is just as tight as it has been, both for consumers and businesses
  • Companies and consumers are hoarding cash and refusing to spend

So, again, we may have technically put the Great Recession in our rear view mirror, but, in reality, most of us can’t tell the difference between today’s economy and when the economy was falling off a cliff back in 2008.

Please watch this awesome video of an interview with Ken Rogoff, a well known economist and professor at Harvard University.  He’s smart.  And he agrees with me.

Do you agree with me, too? Leave a comment below and, as always, please share this post using the social bookmarking buttons below and at the top of the page, especially Facebook and Twitter.

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{ 6 comments }

Jesse September 4, 2011 at 12:37 pm

this socialist president has done so much harm to this nation that it will be years till we undo the damageThat he has done. 349 new business regulations in the month of august-business will not hire till after he is gone

Brian Carr September 4, 2011 at 2:46 pm

Jesse, thanks for the comment but I disagree.

1) Obama isn’t a socialist
2) You realize the Legislative Branch (i.e. Congress), not the Executive Branch (i.e. the President) passes legislation, right?

Petra September 4, 2011 at 12:51 pm

I agree with you. It surely feels like we’re not out of the woods yet.

However I think that companies and people saving up a bit of cash isn’t bad. Their individual position is improving a bit, and this may lead, in the future, to an increased confidence in their financial position and then, finally, to increased spending.

I think it isn’t necessarily bad when people and companies not only use borrowed money, but also saved up money, for their purchases or investments. “The sky is the limit” isn’t true anymore, but the recession showed it never really was true, anyway.

Brian Carr September 4, 2011 at 2:47 pm

I agree the fact companies and people saving more isn’t necessarily a bad thing in and of itself. The problem is much of our (fake) economic growth over the past three decades has been (debt) spending driven that any sort of pull back in spending in favor of saving is going to crush the economy. I hope it’s short term pain for long term gain.

Jennifer September 5, 2011 at 5:35 pm

Brian,

Great article on the recession that never really ended. In various econ lectures I’ve attended, one of the hot topics has been the social impact on the recession, especially on members of Generations X and Y. Are we becoming a society of savers that will no longer want and certainly not buy the BMWs, big screen TVS, large homes and Pottery Barn furniture? Is the new normal words like frugal, saving and investment? The effect of this recession has hit everyone because of its length and the depth of its impact (housing, credit, unemployment, consumer laws, government stimulus, etc) It will be interesting to see what happens when the recession/depression passes (because it will pass) what the new normal will be.

Brian Carr September 7, 2011 at 1:57 pm

Hey Jenn, thanks for the comment and glad you like the site.

Ok, so time for my editorializing… You say: “Are we becoming a society of savers that will no longer want and certainly not buy the BMWs, big screen TVS, large homes and Pottery Barn furniture?”

Unfortunately, my answer is an emphatic maybe. The reason I say that is I believe people are inherently greedy and so long as someone else has the BMW, big screen TVs, large homes, and Pottery Barn furniture, we are going to want those things. Granted, I don’t think we will necessarily want them to the same degree we once did, but I think that desire will always exist in us to some extent.

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