US: Gov't may say US recession over but not job losses US Recession (Analysis) By Tom Raum WASHINGTON, Oct 27 AP - It is about to become official: The recession is over in the United States, but not the pain. The government will release figures this week expected to show that the economy has awakened from its deepest slump since the 1930s and is in the early stages of a recovery. The following week, the government will issue another set of figures expected to show US unemployment continuing to rise toward and possibly above a clearly recessionary 10 per cent. How can both be possible? The government releases third-quarter Gross Domestic Product figures on Thursday. Many forecasters say they will show GDP growing at an annual rate of about 3 per cent, validating a widely held belief among economists that the recession ended in June or July. But try telling that to more than 15 million Americans still unemployed, the small businesses and individuals who cannot get loans and the people whose homes are worth less than their mortgages. Assertions by government and private economists that the recession is over, issued amid graphic examples of continuing wide distress, are raising fresh questions about economic scorekeeping. The national recession may be technically over, but the state of the economy remains in the eyes of the beholder. Or, as President Ronald Reagan liked to say, a recession is when your neighbour loses his or her job. Depression is when you lose yours. A survey of economic forecasters prepared by Blue Chip Economic Indicators, a research organisation, predicted GDP growth would remain positive in each quarter through the end of 2010. In a survey by the National Association of Business Economics, 34 of 43 economists polled said the recession is over. "From a technical perspective, the recession is very likely over," said Federal Reserve Chairman Ben Bernanke. "A recession that showed no signs of ending last January appears to be firmly entering the recovery phase," said Christina Romer, chairwoman of the White House Council of Economic Advisers. Nobody is sugarcoating the statistics, especially in the administration, which agrees with private surveys that suggest unemployment will hover near 10 per cent through most of next year. "Even when you've turned the corner, you have so much work to do," Romer told Congress' Joint Economics Committee. And while she credited much of the turnabout to government stimulus measures and moves by the Fed, she said "by mid-2010, fiscal stimulus will be contributing little to further growth". The economy has lost 7.2 million jobs since the recession began in December 2007, 3.4 million of them since President Barack Obama took office in January. James K Galbraith, an economist at the University of Texas at Austin, suggests too much attention is given to when recessions technically begin and not enough to other measures of the economy. "It's just a word. A recession technically lasts during negative quarters. But that doesn't mean you're back to prosperity once you have positive growth. You're back to prosperity when the unemployment rate is back around 4 per cent," Galbraith said. And that, he said, could take years. A recession is popularly defined as two or more consecutive quarters of negative economic growth, or declining output. But a more refined determination is made by the National Bureau of Economic Research, a private group of leading economists charged with dating the start and end of economic downturns. It looks not only at GDP but at employment levels, real personal income, industrial production and wholesale and retail sales. It put the start date for the current recession at December 2007 and has not yet called an end. There have been 11 recessions since World War II. In the two most recent ones, job growth lagged long after the recessions were deemed over. In the most recent two - July 1990-March 1991 and March-November 2001 - the unemployment rate did not fall to pre-recession levels for several years. After the eight-month 2001 recession, the unemployment rate went from a pre-recession 4.0 per cent in 2000 to 4.8 per cent in 2001. Then it kept climbing even higher - to 5.8 per cent in 2002 to 6 per cent in 2003. It did not return to under 5 per cent until 2006 (4.6 per cent). While there are clear signs of recovery, it is an uneven one. Stocks have surged about 50 per cent since their March lows. And a year after Washington rescued the financial industry, some large banks and Wall Street firms have roared back in profitability. Smaller banks and other businesses are struggling; many have failed or are failing. That disconnect sparked anger among the public and led to sweeping government action last week to limit executive compensation at financial firms that accepted federal bailout money. "While credit may be more available for large businesses, too many small business owners are still struggling to get the credit they need," Obama said on Saturday in his weekly radio and Internet address. "These are the very taxpayers who stood by America's banks in a crisis - and now it's time for our banks to stand by creditworthy small businesses and make the loans they need to open their doors, grow their operations, and create new jobs." There have been modest improvements in manufacturing and other parts of the non-financial business sector, yet signs of weakness linger in commercial real estate and retail spending. Economists suggest some of the expected increase in economic growth is a bounce off the bottom. They attribute it to government stimulus spending, including the now-expired "cash for clunkers" program of government money to persuade Americans to trade old cars for new; accomodative Fed monetary policies; and widespread cost-cutting by companies. Many companies let inventories run down so much that when they ran out, orders picked up. Home resales ticked up as buyers scrambled to complete their purchases before a tax credit for first-time owners expires. And US exporters have benefited from a relentless decline of the dollar that has made US-made goods cheaper and more competitive overseas. None of this adds up to a sustainable upswing. "Absent robust job growth, it is not a true economic recovery," said White House economic adviser Jared Bernstein
