Is the Recession Over?

October 27, 2009 | 265 Comments



According to the officials at Columbia University, the recession ended September 2009. It will have lasted for 21 months, making it the longest recession in modern history. Because the recession coincided with a  financial crisis and a real estate deflation, it felt like the worst thing since the Great Depression. It’s likely that the recovery will be slow and weak and it will be several years before we get back to what is considered “normal.” Ther are 4 barriers we need to overcome before things improve dramatically.

  1. The jobs we lost are gone permanently. For strong new growth, we need to develop new jobs, in areas like energy technology, so that once again we have sustainable industries offering good jobs to skilled workers.
  2. Real estate is still a mess. Even though home sales are up, the market is still being dragged down by distressed properties. Foreclosures and short sales are still happening at higher rates than usual. Until we get prices stabilized, consumers will still be reluctant to spend and the economy will suffer.
  3. The financial sector is still reeling. Financial institutions still do not have a firm idea of market value of the assets they hold, and can’t make investment and capitalization decisions with certainty. The general reluctance for banks to lend will continue for the foreseeable future.
  4. Inflation is a real possibility. The feds needs to figure out how to neutralize spending power as the economy recovers.



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