U.S. & Global Economies
The Recession Is Over
Declining jobless claims have pushed our measure of key economic indicators into positive territory. But brace for a wobbly upturn.
By Jerome Idaszak, Associate Editor, The Kiplinger Letter
October 9, 2009
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Is the recession over? Yes. With initial jobless insurance claims on the wane, our recovery index is flashing three green signals, indicating that the economy has touched bottom and is on its way back up. A trend toward fewer folks filing for unemployment benefits joins increased sales of existing homes and the return to more normal credit spreads as indications that the fever has broken and the patient is recuperating.
The four-week moving average of initial claims for unemployment insurance recently dropped below 550,000, dipping to 549,000 for the week ending Sept. 26. For the week ending Oct. 3, the average continued to slide, coming in at 540,000.
It’s the pace and strength of the recovery that matter now, particularly whether improvements in gross domestic product translate into increased employment. Until businesses start adding to their payrolls -- probably not until next year -- indicators tracking the consumer (retail sales) and manufacturers (durable goods orders) will likely remain unsteady. Housing sales (another consumer indicator) have been doing well this year, having gotten a boost from Uncle Sam in the form of the $8,000 federal income tax credit for new home buyers.
Kiplinger Recovery Index
Improvement for Main Street will come slowly. What’s more, the recovery will be patchier than usual. Typically, housing leads the way in a broadly based pickup -- a rising tide that raises all boats. That won’t be true this time. Rising home mortgage foreclosures are creating problems for both new-home builders and existing-home sellers, throwing a damp towel on markets. Plus, the Federal Reserve is out of room to cut interest rates in order to provide a spark.
As the recovery unfolds in 2010, tech heavy areas are likely to lead the pack as business investment picks up in the U.S. and abroad. Gains will go to Austin, Texas, San Antonio, Denver and Raleigh, N.C. Ports will get a lift as the global economy continues to rebound. The resulting increase in U.S. exports and imports will help Los Angeles, Long Beach, Calif., Seattle and Tacoma, Wash. An increase in global demand for commodities will benefit energy hubs in Texas, North Dakota and Alaska.
Lagging behind in 2010 will be many manufacturing areas. Depressed auto sales will, of course, hurt the Midwestern auto hubs of Michigan, Indiana and Ohio, but also Tennessee, Kentucky and Alabama. Elsewhere, persistently high unemployment will discourage travel and tourism, hurting casino business in Nevada and Mississippi. Weak job growth and wage gains will also delay recovery in tourism-dominated areas such as Hawaii and Florida.
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Reader Comments (19)
Posted by: Frank Hefferen at 10/08/2009 10:21:10 PM
Per Gov't measures the recession may be 'officially' over. However, the damage is already long past. Millions of jobs have went overseas that are never coming back. The jobless suffering is just beginning and the massive devaluation of the U.S. dollar is still in its infancy. In a couple two three years this country is still going to be in a world of hurt thanks to ALL of our sellout Gov't (Repubs & Dems) and the greed of corporate execs.
Posted by: Joe Honick at 10/09/2009 01:54:48 PM
Itis preposterous to use some statistical measure to suggest the recession is over. The reduce level of job displacements is simply due to the reality there are fewer people to displace. With a few million already outside the 27 week being out of work and no help in sight, what is lost is that those represent hundreds of thousands if not a few million families and all the hardships that go with all that. Until there is a significant uptick in jobs and some semblance the President can keep his word on the largest public works programs since Eisenhower, public confidence in both major industry and government will remain dormant.
Posted by: Yewbee at 10/09/2009 02:30:14 PM
No the recession isn't over...! If Fedzilla is basing it's numbers on jobless claims, they aren't counting people like me who are either out of work and have given up looking for right now, or are self employed and don't want to give the guvmint any more of our hard earned dollars for taxes than we have to. On the other hand, why don't we just pull the covers up over our head and pretend real hard that it is over - that's no worse than what we're doing right now...
Posted by: SG at 10/09/2009 02:48:59 PM
Great outlook. Are you considering moving to where the jobs are now?
Posted by: courage at 10/09/2009 06:40:28 PM
the recession is not over. It's amazing to read where these so called analysts get there info. Get real !!!!!!
Posted by: Chris Reich at 10/09/2009 06:49:23 PM
Sure, the recession is over and the U.S. is number one. I'm not seeing any industries really boom out of recession. Sales are sluggish and fragile. Also, We've added a huge amount to the debt. Watch the dollar's value slip. The glory days are over. But who is number one? Depends on the category. Chris Reich
Posted by: gepe at 10/09/2009 08:59:35 PM
The DEPRESSION is over? what planet are you on dude! It's a depression NOT a recession and guess what!! more then likely things will get worse!The REAL unemployment rate is around 18%.
Posted by: Bruce Allen at 10/10/2009 05:44:25 PM
The numbers may support your conclusions but job growth, real job growth, has yet to show up. And when that job growth does appear will the newly employed consumers open up their wallets? I'm not sure. Granted, I didn't lose my job but trading the markets has been nothing short of treacherous. I have been keeping a tight grip on my finances during this downturn and have no desires to start up a new spending spree any time soon. If the economy is starting to turn around, I'm all for it but I'm still going to be the same tight fisted consumer that I have always been.
Posted by: Bill Dexter at 10/12/2009 02:22:23 PM
Does the statement 'improvements in gross domestic product translate into increased employment' contain within it the assumption that 'businesses start adding to their payrolls' will employ Americans? If yes, then what will cause THAT to be true for the first time in 25 years? If not, then what's the point? More anchor babies to pay for?
Posted by: Dr Jack Ryan at 10/13/2009 07:35:51 AM
Recession not over? Who are you kidding? Go tell that to the unemployed who have lost their jobs.
Posted by: Kettle at 10/13/2009 10:34:25 AM
I dont know where these people live that think the recession is over....for seniors, we are in a depression.
Posted by: Scott at 10/20/2009 04:25:02 PM
Just lost my job, losing the house, no immediate employment in sight! Are you kidding me?
Posted by: EJ at 10/20/2009 07:15:38 PM
You are out of your mind if you think the recession is over. It doesn't take a rocket scientist to answer this question. But then again, it took just a moment to see why you would think this way... can anyone say Wallstreet thugs? The real unemployment figures are not reported. Clearly, you have no clue.
Posted by: john galt at 10/20/2009 07:30:34 PM
The recession is over??? ... Unemployment is approaching 10% and will, no doubt, go higher. We're hearing reports that a minimum of 10 % will be the norm for the foreseeable future; the deficit is skyrocketing and the looters are denying that the healthcare legislation will add to that deficit. The American people are not that stupid to believe all this horsehockey. And anybody who agrees with this crap has got his head being squeezed by his sphincter muscle. Ayn Rand was so prophetic when she wrote 'Atlas Shrugged.' It's happening to us now as we witness these looters (the Congress)and the moochers (the welfare culturalists) enact and benefit from the very thing that Alexis de Toqueville warned us about when he wrote of the great American experiment in freedom back in the mid 1800's. I may be pessimistic, but I see no way to stop the inevitable. There are too many 'Americans' who don't want the responsibilty for their own freedom. WHO IS JOHN GALT?
Posted by: Robert Scobie at 10/20/2009 08:05:14 PM
Interesting. on 10/09 you said that the Recession is over, yet as of 10/20, four top Aerospace stocks that I track are down very SIGNIFICANTLY.
Posted by: OhioNeedsJobs at 10/20/2009 08:18:26 PM
Glad to hear that the recession is over. I'll be sure to pass the news along to my husband who has been laid off since March 2008. He's been unable to find work and has exhausted all his unemployment benefits. Our household, along with almost two million others, are happy that the bureaucrats in D.C. will be thoroughly enjoying their upcoming holidays while the long-term unemployed and their families go without food, shelter and warm clothes. Maybe we can print out this article and eat it for Thanksgiving Dinner.
Posted by: tom at 10/20/2009 10:19:00 PM
This was clearly written by the same kind of bubble heads that got us here in the first place. These "experts" need a "check up from the neck up". Come on folks! It isn't rocket science! You can not spend your way out of financial problems!
Posted by: Robert at 10/20/2009 10:42:15 PM
...Economy on the rebound? recession waning.. What world do you live in, more and more people losing their homes everyday, no jobs available. The recession is just getting started...Trust me..
Posted by: Gulliblenomore at 10/21/2009 01:56:28 PM
So the recession is over because it is politically advantageous for the White House? Because economists who are notoriously clueless about predictinig the future say so? Is this writer part of the elite club of insiders on Wall Street and/or the power brokers government? He certainly is not part of middle-class America bearing the brunt of this economy and disasterous fiscal policies.