According to remarks from Fed Chief Ben Bernanke the recession is technically over. He has agreement from forecasters as well. This doesn’t mean things are rosy yet in the economy though. Bernanke still feels the economy will be weak for some time.
Consider that the market dropped significantly in the past year so slight gains which indicate we are out of a recession won’t necessarily do much for the economy as a whole. Think about this: Imagine you lost $100. That’s pretty bad right? If you found $5 then your money has gone up but your still down $95.
Let’s take a look at retail sales in August:
You can see that the Cash for Clunkers really helped push retail sales as motor vehicle and parts sales were up considerably from the previous month. But if you look at the change from a year ago you can see how much sales are still down from last year.
This could be good for consumers this holiday season. According to a survey by CIT Group, Inc. two-thirds of retailers polled say that thy will offer discounts lower than last year’s holiday season. Not that you should go out and spend like crazy, but you may be able to find some great bargains this year. This is something to think about as you prepare your holiday budget for this year.
So we’re most likely out of the recession. Really recession is just a term based on some numbers. This announcement by Bernanke doesn’t mean that the economy is well on it’s way to pre-recession levels or that companies will start hiring right away. This just means we possibly hit bottom and we can now begin a slow climb back up.
What effect do you think the recession ending has?
Source: Wall Street Journal – Bernanke: Recession ‘Likely Over’
{ 36 comments… read them below or add one }
It’s more of a psychological thing, I think. The end of the recession, like you said, means that things can start improving. And if people feel better about things starting to improve, then they most likely will. But it will still be a long haul, I think.
.-= Miranda´s last blog ..Benefits for Those Waiving Retirement RMDs =-.
True. I wonder how the economy if recession we never mentioned?
These are also the forecasters who said the recession never started in the first place and were off 2 trillion in out 10 year debt mark. Just like Pesci in My Cousin Vinny, “Everything they just said is BS).
So I take it you’re a bit skeptical of the economists’ remarks?
Nice write up. I think we’re headed out of this thing for good. Still, I think it will be a slow climb up. But, that’s probably better than some fake bounce.
Psychologically, I think we’re all incapable of feeling down about the economy and with holding our spending for a prolonged period. We just sort of reach a point where we accept our losses and move on with life. I think that’s where we’re at now. We’ve all taken a beating, have shaken it off, and want to look toward the future. But we’re not in the mood for a speedy recovery. It just wouldn’t feel right.
Jobs will eventually come back and then the spending will really kick back in. I have a long term faith in the American business.
.-= PT´s last blog ..Book Giveaway: The 1-2-3 Money Plan =-.
That’s a pretty realistic and optimistic outlook. We’ve been through bad times before and came out of it and we tend to have short memories, especially as times get better.
I agree that it is a psychological thing and will make people more optimistic. However, I think many people are going to be reluctant for a while to ensure their finances are safe.
http://www.newsy.com/videos/is_the_recession_over
You know, it’s a good thing that people are reluctant. If we were all a little more reluctant as a country then this mess might not have happened. It will be interesting to see if spending/saving habits change as the economy recovers.
Perhaps we can keep the important lessons that the recession taught us!
.-= Duddes02´s last blog ..Citi Field =-.
We’ll see. I hope so.
It sure feels like the recession is slowing a bit, but it won’t hit home until Americans are back at work and confident that their jobs are secure.
.-= Robert´s last blog ..Men vs. Women: Who Really Are the Safest Drivers? =-.
You know, at no time are our jobs completely secure, it’s just easier to switch in a stronger economy. But maybe this will help raise the level of our work ethic and building networks in our fields.
When you consider all the constraints and money put into the
economy by the FEDS, I would say the recession is not over. Since
technically, the US no longer has a free market economy and won’t
be for many years to come. Until the FED exits. Further, the US will continue to lose jobs. There will be less job creation. That is technically speaking.
Technically we haven’t had a true free market economy ever. There have always been some limits to help general social welfare. I know there are many who argue against the Fed but it’s existence helps the economy function as a whole.
That said, the President recently said that jobs will be hurting for the next year. We may see some job creation but it won’t be at the level we would like.
Well, even if the recession isn’t over, I’m sure there are things we have learned from it!
Recession: 1 Year Later
.-= Gina´s last blog ..Recession: 1 Year Later =-.
I know that Bernanke and co. are speaking in a technical sense, but I think for a lot of people it’s more like the free-fall and slide into the abyss phase is over, but it won’t really feel like growth again until unemployment comes back down to something approaching normal.
.-= Joe Morgan´s last blog ..Wages Growing Again? =-.
True. Technically it may be over but it will take some time for firms to catch up and start hiring again.
I’m not sure if we’re out of the recession or not yet – but it sure doesn’t feel like we are. My guess is that we may be in for a little bit of a roller coaster ride still. We shall see!
.-= Peter´s last blog ..First Time Homebuyer Tax Credit May Be Extended To All Homebuyers And Increased to $15,000 Through New Bill =-.
It may be over but it doesn’t mean the economy is back to normal. Companies and people are going to be a bit gun shy about ramping up production and consumption to pre-recession levels. Still, we may see things slowly turning around over the next few months. Baby steps.
No, it’s not. Bernanke is full of hot air.
.-= Matt Jabs´s last blog ..Should I Invest While Still In Debt? =-.
Haha. Tell us what you’re really thinking Matt! I hope this isn’t a case of massaged numbers but time will tell.
I don’t think we are even close to the end of the recession.
I believe we are only in the middle of the eye of the storm.
Robert Kiyosaki was talking about this in his book “Conspiracy of The Rich” which I recommend each one of us pick up when it hits bookstores toward the end of September. I know it is available to purchase on Amazon right now.
*He goes through all the past historic economic decisions that have affected us and our economy, and shows you how he is preparing and thinking different for the future to still stay on top. (It was so good I read it in 3 days online when it was available for free
*There are 3 graphs in chapter 10 I believe that are the “writing on the wall” to the future of this economy…Even if you don’t purchase the book….at least go look at these graphs in chapter 10…You will see what I mean when you understand what they are telling you.
ANYWAY…
One of the biggest things yet to come is the dollar amount of debt that is about to be reset in the housing market. (payments increasing on ARM loans for those who couldn’t refinance their house to a 30 year fixed rate).
All of the individuals who used an ARM loan to purchase their house 4-5 years ago….those rates will be resetting soon…and will cause a huge negative effect in the housing market, because most people won’t be able to pay because they are already cash strapped as it is.
Adding to this…with the Government messing with the free-market, all of this “growth” as they say has happened…is really just a bunch of smoke and mirrors set up to look like a positive.
Remember: WE PAID FOR THE CASH FOR CLUNKERS PROGRAM WITH OUR OWN TAX DOLLARS
What do you think?
I think those who have ARM’s that won’t be able to afford them when their financing adjusts need to be doing all they can to refinance into 30 year fixed loans. That’s why we have recent programs like Making Home Affordable to help people refinance. We should know by now that ARM’s aren’t for everyone. Rates have nowhere to go buy up.
Certainly many like Kiyosaki but many also also don’t like him. As with any expert you still have to do your own research. If his info is sound then it’s definitely worth looking into. I’ll give it a look. Thanks.
Business abhors uncertainty.
The problem is that there’s nothing but uncertainty with the economy – is the financial sector done with unprecedented write downs? Will the health care overhaul pass, and if it does will employers be off the hook for medical expenses or be made to pay more? Will Cap and Trade pass, and if so how much of a tax will that create on businesses? How bad will the federal deficit get and how much will that raise the corporate tax rate? What kind of regulation might be coming out of Washington D.C. for a given sector … and so on..
All these unknowns make planning for the future difficult, and hiring full time employees is not without risk to the employer… I don’t expect the job market to recover significantly until these questions are either answered, or made irrelevant.
.-= Mike´s last blog ..Top 5 Best Investors. =-.
There will always bee some uncertainty but I think having the Fed chief declare that the recession is likely over does help give confidence to the markets that things will start moving up.
The markets have been trying to make this a psychological recovery. But sooner or later, people will see the truth and I believe there will be a bounce down.
As mentioned ARMs are about to be a big problem. As is commercial realestate. The Gov’ts stimulus hasn’t done much more than increase our debt and soon or later our taxes. More taxes, less to spend. It is a vicious circle.
.-= ChrisCD´s last blog ..America’s Credit Union CD Rates =-.
ARM’s have been a problem for years, that’s why we have a refinancing program going on now so people can lock in rates. Time will tell what kind if chapter will be written in future economics books.
I read an article recently that said in the past when recessions have technically been over, people are still scared and don’t trust the economy so they don’t spend as much, and we end up slipping back into a recession. Sadly, this information just freaks me out and makes me want to tuck more money into my savings account, ha.
Even if the recession is technically over, I see that in some comments on this post, and in conversations with people I know, people won’t really trust it’s gotten better until they see it get better in their own lives somehow. I think it will take quite a while more for people to FEEL like we’re not in a recession.
.-= Jennifer´s last blog ..How Does Refinancing Work? =-.
Many think there will be a double dip and that what little recobery we have seen is only a boost from stimulus programs. I think people don’t know what to think when the “pros” speak about the economy. Hopefully we hit bottom already. We’ll see in a few months time.
The bull market is definitely back guys! Pay is going back to 2007 levels, at least in finance. Whoo hoo!
.-= Financial Samurai´s last blog ..What Renting DVD’s Teaches Us About CD Yield Maximization =-.
I hope we’re in a bull market! Unless I buy some more positions then it can be low for a bit.
It’s not over! Most of these things were driven my government programs and back to school. With unemployment at 10% and rising (it’s a lagging indicator) and foreclosures still increasing, I would not say we have seen the last of this recession.
.-= Cheapskate Sandy´s last blog ..The Dangers of Online Billing =-.
Seems a lot of people don’t think it’s over yet. We’ll need to see some lasting stats before most think we’re finally out of it.
Nonsense. It’s over. The Recession has won. There’s nothing else Obama can do. He might as well just give up on getting us out of this Recession now.
Not sure how you mean. Are you saying we’re on the road to recovery now?
It safer to say that the market is recovering but is in an extremely unstable position, everyone can still feel it – those who were lynched from work and those still looking for work.
{ 1 trackback }