Wednesday, September 16, 2009

Recession's End

Fed chairman Ben Bernanke has now said that the recession, which began in December 2007, is "very likely over." But of course he doesn't know for sure yet - none of us do. As we've said many times, these things can only be decided in hindsight.

So when we will know if the recession has ended? The Commerce Department issues quarterly reports on the changes in gross domestic product, and there's one due for the third quarter - July through September - around the end of October. So we have another month and a half to go before we'll know if Bernanke was correct.

And even then, we won't be positive. The last time Commerce released the quarterly GDP figures, at the end of July, in addition to providing a figure for the second quarter of '09, it revised the numbers for all of 2008 as well. So even if, on Halloween, we find out the recession ended over the summer, it might get revised back into existence next January.

The bottom line is, of course, that it's really not important to know exactly when the recession ends. Other economic and financial numbers are critical to follow, but the day that GDP moved from shrinking at a pace of 0.1 percent to growing at a pace of 0.1 percent is not especially significant.

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