On the way to work this morning I was listening to the news and heard the commentator state that we were still deep in a recession. I started to wonder exactly how this was. The latest from wall street was that the Dow Jones was up to where it was before the crash (over 12,000 now, but around 11,000 before the crash). Fuel and grocery prices are back to where they were. It seems that the only thing that isn't where it was before this all started is home sales and prices (which were artificially inflated anyway) and unemployment. First off, a recession indicates that the economy is shrinking and that we are falling back to lower levels. At a minimum, it says we are at a level lower than what we were before. This is just not the case. Spending is up, production and consumption are where they were and the Dow Jones Index (the major indicator for the crash) is higher than it was). Thus we are using incorrect indicators (unemployment and housing market) to declare a recession.
Let's look at unemployment. I know unemployment is normally an indicator, but in this case I don't think so. The fact is, that when the recession hit, the employers started firing the dead weight to save their companies. When the economy began its recovery, they realized they could operate with their current employees and thus did not rehire. The US has, for a long time, had an excess of redundant employees. We literally made up work for people to do. Think of it this way, if you were to go to the Amish community and explain your job, could you make it sound convincingly necessary? I don't think I could and I'm in the military. I am not saying that we need to fire a lot more people, nor am I saying that everyone that was laid off deserved it. What I am saying, is that we are no longer in a recession, the economy is growing again and has been for some time. The unemployment numbers, I feel, are inflated because some people refuse to take less than what they had before the recession. Now I am not saying that this is the case for everyone on unemployment, I am sure that somewhere there is someone who is truly trying to find any job and is having no luck for whatever reason. In order for the unemployment numbers to go down, we need to create new jobs. This means we need to increase our manufacturing and production. The problem is that, for some inexplicable reason, we have convinced ourselves that we are still in a recession. Production and consumption are back to where they were before the crash, thus we need to increase production to higher levels. The problem we have is that we use unemployment numbers to prove that we are still in a recession and very few employers are willing to expand during a recession. Further, banks are not willing to give business loans for expansion during a recession for obvious reasons. Thus we need to declare the recession over.
The one question I have to keep asking myself is, "who is saying that we are in a recession?" Is it the republicans because they don't want to give the democrats the credit for getting us out of it, or are the democrats perpetuating it to prove just how badly the republicans screwed up before they took office? Or maybe they both are perpetuating it because if we are scared that we may not have jobs, they can keep pushing things on us we normally wouldn't like because we are looking for ways to save ourselves? I don't know and it really doesn't matter. We can no longer reasonably sate that we are in a recession. not when we have more indicators for a growing economy than we do for one in a recession. I will let you make your own conclusions, but as for me, I can't see how we are in a recession any more. That's my two cents and that may be all it's worth (or less). I look forward to any feed back, especially if you have anything that is contrary to what I have. I am not saying my research was perfect (I didn't want to spend all morning looking things up), in fact I really do appreciate any other info you have. Thank you for reading, have a great day.
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