The numbers indicate that the longest downturn since the Depression has finally ended. But the numbers haven't erased a lot of the nation's economic pain.
The data will say the recession ended March 31.
On Friday morning, the U.S. Bureau of Economic Analysis will announce that U.S. gross domestic product has increased for a third straight quarter. After growing 2.2% in the third quarter of 2009 and 5.6% in the fourth quarter, economists expect the numbers to show that the U.S. economy grew 3.3% in the first quarter of 2010.
Latest news on the economic recovery
Feel like dancing in the streets? Didn't think so. For a lot of Americans, no matter what the numbers say, the pain of the recession will go on. The recession is over? So what.
What we've got is a clear disconnect between what the economists' numbers say and what most Americans feel in their own lives.Msn.Video.createWidget('PlayerAd1Container', 'PlayerAd', 304, 314, {"configCsid": "MSNmoney", "configName": "player-money-4x3-articles-inline", "player.vcq": "videoByUuids.aspx?uuids=16f03b03-47f4-4d7c-9f5b-26291fc212d7,b77e098a-3e2c-4e33-a049-5c95d5b33a52,611ff85b-98d3-489d-8a5c-9db53a27a902,2f46b085-324a-4a00-9e07-b61bb02258d0,5d8e335f-070b-4bfe-8773-25a0493a8317,b0b2cd11-5b94-4062-a305-878960d1868d,8c0054a4-8055-4d0a-9aa9-5e02ab926755,58deda83-6ed8-4e28-a249-c9b8d2c14025", "player.fr": "iv2_en-us_money_article_Investing-JubaksJournal-inline"}, 'PlayerAd1');Msn.Video.createWidget('Gallery4Container', 'Gallery', 304, 150, {"configCsid": "MSNmoney", "configName": "gallery-money-articles", "gallery.linkbackLocation": "bottom_left", "gallery.numColsGrid": "3", "gallery.categoryRequests": "videoByUuids.aspx?uuids=16f03b03-47f4-4d7c-9f5b-26291fc212d7,b77e098a-3e2c-4e33-a049-5c95d5b33a52,611ff85b-98d3-489d-8a5c-9db53a27a902,2f46b085-324a-4a00-9e07-b61bb02258d0,5d8e335f-070b-4bfe-8773-25a0493a8317,b0b2cd11-5b94-4062-a305-878960d1868d,8c0054a4-8055-4d0a-9aa9-5e02ab926755,58deda83-6ed8-4e28-a249-c9b8d2c14025;videoByTag.aspx%3Ftag%3Dmoney_dispatch%26ns%3DMSNmoney_Gallery%26mk%3Dus%26vs%3D1;videoByTag.aspx%3Ftag%3Dbest%2520of%2520money%26ns%3DMSNmoney_Gallery%26mk%3Dus%26vs%3D1"}, 'Gallery4');The numbers say the recession began in the last part of 2007. In the fourth quarter of that year, U.S. gross domestic product, the measure of all the goods and services produced in the United States, came to $13.39 trillion, according to the Bureau of Economic Analysis. As the recession struck and then deepened, the size of the U.S. economy shrank. By the fourth quarter of 2008, U.S. GDP was down 1.86% to $13.14 trillion. That was about $250 billion in lost economic activity.
The economy got smaller and smaller in the first half of 2009 and finally hit bottom in the second quarter, at $12.90 trillion. That was a drop of 3.7% from the peak in the economy in the fourth quarter of 2007, and it represented about $490 billion -- almost half a trillion -- in lost economic activity.
The recovery, by the numbers anyway, started in the third quarter, when the economy grew by $71 billion. By the fourth quarter, GDP was back to where it had been in the fourth quarter of 2008. And with first-quarter GDP growth of anything greater than 1.83%, the economy will have recovered all the ground it had lost since the fourth quarter of 2007.
Why, that would mean the Great Recession had been completely erased. Never happened. Business as usual. Back to normal.
Back to normal? Let's hope not.The not-so-great recovery The effects of the recession are a long way from over.
When GDP began to rise again in June 2009, the U.S. economy kept losing jobs. Since then, 900,000 workers have lost their jobs. Almost three quarters into the recovery, in March, the official unemployment rate was still 9.7%, even though the economy had added 162,000 jobs that month. The unofficial full unemployment rate, the one that includes discouraged workers who have stopped looking for jobs and those who have found part-time work but really want to work full time, actually went up in March, to 16.9%, from 16.8% in February.
And then there are the long-term unemployed. The number of workers out of work for 27 weeks or longer climbed in March to 6.5 million from 6.1 million in February. That means that 44.1% of all the unemployed have been out of work for half a year or more.That's the highest percentage since the government began keeping records in 1948.
The extraordinarily high percentage of long-term unemployed isn't just a feature of this recession. The numbers say long-term unemployment has been rising over the past 10 years and that the recent recession only continues a trend visible in the recession of 2001 as well. One-quarter of the long-term unemployed leave the work force permanently, a Congressional Budget Office study found.
Not that even those of us who are employed are exactly rolling in the green stuff now that the recession is over. Personal income rose just 0.1% in February. Real disposable personal income grew by the same 0.1% in February.
And it's not like our gains in our personal wealth are making up for that lag in income. Sure, stocks are up 80% off the March 2009 bottom, but investors are still looking at a Dow Jones Industrial Average ($INDU) that was at 10,500 a decade ago and stands around 11,000 today. That's a gain of about 5% in 10 years.
Continued: Home prices a big pain pointMore from MSN Money and MoneyShow.com
Why your paycheck might be going upJubak on video: Will more big banks get busted?How to tell when the recession is really overOn Wall Street, does 'buy' mean 'sell'?Why the housing market is about to turnJubak video: The key trend to watch in earnings season1 | 2 | next >
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OK! Excellent essay - well constructed, knowledgeable and readable.
We remain in a "Moderately Bearish" mode for all these reasons and the possible contagion from the Euro situation. This information is very, very helpful in framing a long-term strategy.
ReplyReport AbuseBIG_JONN #2Thursday, April 29, 2010 10:41:57 PM
Jim,
You, Markman and Fleckstein write some good articles, this one is good too.
But my honest reponse to this one is, " No duh ! ".
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The economy got smaller and smaller in the first half of 2009 and finally hit bottom in the second quarter, at $12.90 trillion. That was a drop of 3.7% from the peak in the economy in the fourth quarter of 2007, and it represented about $490 billion -- almost half a trillion -- in lost economic activity.
The recovery, by the numbers anyway, started in the third quarter, when the economy grew by $71 billion. By the fourth quarter, GDP was back to where it had been in the fourth quarter of 2008. And with first-quarter GDP growth of anything greater than 1.83%, the economy will have recovered all the ground it had lost since the fourth quarter of 2007.
Why, that would mean the Great Recession had been completely erased. Never happened. Business as usual. Back to normal.
Back to normal? Let's hope not.The not-so-great recovery The effects of the recession are a long way from over.
When GDP began to rise again in June 2009, the U.S. economy kept losing jobs. Since then, 900,000 workers have lost their jobs. Almost three quarters into the recovery, in March, the official unemployment rate was still 9.7%, even though the economy had added 162,000 jobs that month. The unofficial full unemployment rate, the one that includes discouraged workers who have stopped looking for jobs and those who have found part-time work but really want to work full time, actually went up in March, to 16.9%, from 16.8% in February.
And then there are the long-term unemployed. The number of workers out of work for 27 weeks or longer climbed in March to 6.5 million from 6.1 million in February. That means that 44.1% of all the unemployed have been out of work for half a year or more.That's the highest percentage since the government began keeping records in 1948.
The extraordinarily high percentage of long-term unemployed isn't just a feature of this recession. The numbers say long-term unemployment has been rising over the past 10 years and that the recent recession only continues a trend visible in the recession of 2001 as well. One-quarter of the long-term unemployed leave the work force permanently, a Congressional Budget Office study found.
Not that even those of us who are employed are exactly rolling in the green stuff now that the recession is over. Personal income rose just 0.1% in February. Real disposable personal income grew by the same 0.1% in February.
And it's not like our gains in our personal wealth are making up for that lag in income. Sure, stocks are up 80% off the March 2009 bottom, but investors are still looking at a Dow Jones Industrial Average ($INDU) that was at 10,500 a decade ago and stands around 11,000 today. That's a gain of about 5% in 10 years.
Continued: Home prices a big pain pointMore from MSN Money and MoneyShow.com
1 | 2 | next >
Check out Jim's top stocks for the next 12 months.
Read how to invest with Jubak's showcase portfolio.
Follow the long-term portfolio from Jim's book "The Jubak Picks."
See Jim's new portfolio to help navigate the treacherous interest-rate environment.
OK! Excellent essay - well constructed, knowledgeable and readable.
We remain in a "Moderately Bearish" mode for all these reasons and the possible contagion from the Euro situation. This information is very, very helpful in framing a long-term strategy.
Jim,
You, Markman and Fleckstein write some good articles, this one is good too.
But my honest reponse to this one is, " No duh ! ".
Read Full Article »
