Post Great Recession Expectations

The most recent event to alter the way the ordinary person thinks about economics was the Great Recession. The National Bureau of Economic Research (NBER) has long served a useful purpose as the arbiter of recessions — when they begin and when they end. As prestigious as it is, the Bureau erred when it “officially” declared the end of the Great Recession as June 2009. Even by this overly conservative ending date, the 18-month duration greatly exceeded the post-WWII average of 10 months. There was one other remarkable episode, the sharp and deep 1981–1982 decline of Ronald Reagan’s first term. At the time, I called it the “Great Recession,” not without cause. As it turns out, I was among the first (if not the first) to call the more recent decline “the Great Recession.” At the time I wrote,As the Dow became more and more volatile, the National Bureau of Economic Research officially declared a recession beginning in December 2007. Most likely, the long recession would be named the second Great Recession of the post-WWII era or the Great Recession of 2007–2010, the longest and most worrisome since the Great Depression of the 1930s. Today the 2010 ending date is a provisional one.A year later, I amended the name of the latter episode to the “Global Great Recession.” The Great Recession had circled the globe. Besides “Global,” you naturally raise the question of why the Bureau and I are at odds. The short answer is found in the magnitude of the unemployment rate that continued to bedevil policymakers for many years. It remained disturbingly high, reaching 10.2 percent in October 2009, followed by 10 percent rates. Dreadful numbers spilled over into 2010 and got stuck at 9.6 percent in August, September, and October. Worse, the possibility of a significant decline remained remote. Economists were referring to “the jobless recovery” when indeed economic growth remained at a snail pace. The economy had stagnated, awaiting more stimulus from monetary policy, as fiscal policy was taken off the table because of that old visceral fear of federal deficits and debt.