The Recession is Over (Huh?!?)

The Recession is Over (Huh?!?)

“… a trough in business activity occurred in the U.S. economy in June 2009. The trough marks the end of the recession that began in December 2007 and the beginning of an expansion.”                                                                                                                                                           – National Bureau of Economic Research (NBER)            September 20, 2010 News Release

The recent proclamation that the recession is over (it officially ended more than a year ago), has left many Americans puzzled.  This news doesn’t seem to jibe with continuing job losses, foreclosures, and financial stress that we hear about daily.

As your financial advisors, we understand the factors considered by the NBER.  But usually, by the time an official “end of recession” announcement is made, signs of recovery abound.  Not this time. The official end of the recession is much like a seriously ill patient that is improving.  Their condition has been upgraded from critical to stable, but the patient is still very sick.

In the tidy world of theoretical economics, things unclear can be proclaimed as irrefutable truisms (e.g., the mistaken notion that Keynesian economics always works), while an obvious truism (e.g., markets are inefficient pricing mechanisms, hence the existence of bubbles and crashes) can be dismissed using mathematical models masquerading as science.  Lewis Carroll would be smiling.