Recession Was Longest in Modern Record, Report Reveals
With an unemployment rate stuck well above 9 percent, it may not feel like an accurate diagnosis to many Americans, but economists say the longest recession since World War II finally ended in June 2009. At least that’s the judgment released today by the National Bureau of Economic Research, the arbiter of when recessions begin and end.
The longest recession in modern record began in December 2007 and lasted 18 months, according to the report released by the NBER. But the committee — which discussed the data in a conference call yesterday — was careful to say that it did not mean the economic recovery was moving along well. In fact, members wrote, “the committee did not conclude that economic conditions since that month have been favorable or that the economy has returned to operating at normal capacity.”
To reach its conclusion, members of the NBER committee studied its own index of data focusing on gross domestic product, income, employment, and industrial activity. Back in April, the committee met to decide whether the recession had ended, but concluded that it did not have enough data yet to do so.
As recessions go, the “Great Recession” of 2007-2009, as it is often called, is significantly worse than other downturns by some measurements like joblessness, and not as bad as measured by other data like economic output. But hen it comes to what matters most to Americans — having a job — it may be worse than the crippling recession of 1981-82.
Catherine Rampell of the New York Times notes, for example, that the traditional unemployment rate, for example, was not quite as bad as the 1981-82 recession when it reached 10.8 percent. But she writes, “the composition of the workforce looked very different in the 80s” and “if you adjust for age, unemployment this time around looks much worse.”
Moreover, other economists have noted that the broader measure of unemployment — which includes people who are not working as much as they would like to — puts athe truer rate of unemployment and underemployment well into the teens and makes this recession and the subsequent recovery more painful than any other postwar downturn.
The committee made no determination about where the economy was headed and did not rule out the prospect of a double-dip recession. And some reacted to today’s statement with new concerns over what they see as a stagnating economy.
That was how economist Mark Thoma of the University of Oregon put it in a blog he wrote about the NBER report:
“Yes, there are signs of green shoots and signs weve turned the corner,” Thoma writes. “But I’m very worried we are going to bounce along the bottom of the valley near the trough for an extended period of time rather than making a strong move back to full employment. If the apparent turnaround stalls, or if we regress a bit, it won’t be as certain that the bottom is behind us.”
Still, other economists think the odds of a double-dip recession remain small for the moment.
“Our own outlook assigns a 25 percent probability to the double-dip outcome,” said Nigel Gault, chief U.S. economist for IHS Global Insight. “We view the most likely path as a continuing but painfully slow recovery.”