When will the recession end?

[muon2]

Opebo, your percentage numbers would have more meaning if they were inflation adjusted. Inflation was alive and well in 1976-1978. Real percentage growth might have been anemic or negative.

I think he did use real growth, the first percentage is nominal, the second real?  Or is he fooling around with them?

Absolutely correct, bullmoose.  Sorry, Torie, that my labelling and columns were a bit off, but yes, the first figure is nominal, and the second 'real' GDP growth.  Real GDP growth was quite strong in 76, 77, and 78.  Those were great years for american workers.

My apologies Opebo. I was just having a senior moment - your chart upon review was sufficiently lucid to cause  me to pen  the first bit of this sentence.

I agree that the chart was accurate, but the four year stretch from 1976 through 1979 wasn't quite better than anything since. I used the tables for annual and quarterly real GDP as maintained by the Bureau of Economic Analysis. That stretch had a total growth of 20.00% over four years. The period from 1983 through 1986 had a growth of 20.70%. It is true that no four year period in the 90's beat that. For comparison, Clinton's best years were from 1996 through 1999 and only reached 17.91%.

On the other hand, if you use average annual percentage increase in jobs by President as your barometer,  then for the last 85 years every Democratic President beats every Republican President. The worst 3 are Hoover, Bush 43, and Bush 41.

That's a bit deceptive. If you want to compare job creation on an even basis then you should look at growth over a four-year term. That avoids averaging effects for two term presidents compared to one term presidents. With that measure, Reagan's 2nd term exceeds either of Clinton's terms or the Kennedy/Johnson term.

[opebo]

I agree that the chart was accurate, but the four year stretch from 1976 through 1979 wasn't quite better than anything since. I used the tables for annual and quarterly real GDP as maintained by the Bureau of Economic Analysis. That stretch had a total growth of 20.00% over four years. The period from 1983 through 1986 had a growth of 20.70%. It is true that no four year period in the 90's beat that. For comparison, Clinton's best years were from 1996 through 1999 and only reached 17.91%.

Still, though, I think the most interesting point is that 1976-1979, years that are historically poo-pooed, and viewed by many forumites as 'bad years', where in fact better than any period of the 1990s, the 2000s, and as good as even the best period of the eighties, but with out the severe downward pressure on working class incomes occasioned by Reaganomics.

The point is, really that the late seventies, far from being an argument against Keynesianism, are yet another confirmation of its preferrability for most people.

[muon2]

I agree that the chart was accurate, but the four year stretch from 1976 through 1979 wasn't quite better than anything since. I used the tables for annual and quarterly real GDP as maintained by the Bureau of Economic Analysis. That stretch had a total growth of 20.00% over four years. The period from 1983 through 1986 had a growth of 20.70%. It is true that no four year period in the 90's beat that. For comparison, Clinton's best years were from 1996 through 1999 and only reached 17.91%.

Still, though, I think the most interesting point is that 1976-1979, years that are historically poo-pooed, and viewed by many forumites as 'bad years', where in fact better than any period of the 1990s, the 2000s, and as good as even the best period of the eighties, but with out the severe downward pressure on working class incomes occasioned by Reaganomics.

The point is, really that the late seventies, far from being an argument against Keynesianism, are yet another confirmation of its preferrability for most people.

I think the reason that the 70s aren't looked upon favorably is that the recessions that bracketed that period were not only ones of sluggish growth, but were also marked by high inflation. Workers wages were not generally indexed for inflation, so even those that kept their jobs had serious erosion of their purchasing power. The space economy also took a big hit in the late 70's as highly trained engineers and scientists had to leave the field. Many had to take jobs for which they were overqualified (eg. rocket scientists driving cabs in LA), and this had the effect of pulling down disposable income in that sector of workers.

[Psychic Octopus]

Q2 2010 is a safe bet.

[opebo]

I think the reason that the 70s aren't looked upon favorably is that the recessions that bracketed that period were not only ones of sluggish growth, but were also marked by high inflation. Workers wages were not generally indexed for inflation, so even those that kept their jobs had serious erosion of their purchasing power. The space economy also took a big hit in the late 70's as highly trained engineers and scientists had to leave the field. Many had to take jobs for which they were overqualified (eg. rocket scientists driving cabs in LA), and this had the effect of pulling down disposable income in that sector of workers.

Very interesting post, muon, mostly due to your reference to the 'space economy' - I had never heard of such a thing before.  One wonders how many people are employed by this.

As for erosion of purchasing power, yes, this did occur in some cases in the 70s, but keep in mind that a much higher percentage of workers were in unions at that time, and of course unions ensured that cost of living increases were provided.  Working class incomes eroded far more in the 1980s than in the 70s.

[muon2]

I think the reason that the 70s aren't looked upon favorably is that the recessions that bracketed that period were not only ones of sluggish growth, but were also marked by high inflation. Workers wages were not generally indexed for inflation, so even those that kept their jobs had serious erosion of their purchasing power. The space economy also took a big hit in the late 70's as highly trained engineers and scientists had to leave the field. Many had to take jobs for which they were overqualified (eg. rocket scientists driving cabs in LA), and this had the effect of pulling down disposable income in that sector of workers.

Very interesting post, muon, mostly due to your reference to the 'space economy' - I had never heard of such a thing before.  One wonders how many people are employed by this.

As for erosion of purchasing power, yes, this did occur in some cases in the 70s, but keep in mind that a much higher percentage of workers were in unions at that time, and of course unions ensured that cost of living increases were provided.  Working class incomes eroded far more in the 1980s than in the 70s.

The federal investment in the space race was significant. In a number of areas this spawned related industries to serve the space program. There was a supply and service chain that included the beginning of the high-tech industry. This sector was hit hard when the feds largely shut down the program in the late 70's.

In the 70s the percentage of private-sector union workers was in the low 20's and began their drop into the teens starting in 1979. That is the usual marker of change in working-class income -- a full two years before Reagan took office and more like 3-4 years before his policies became effective. By early 1984 the declines in union membership had stabilized.

[catmando]

Keep in mind that the misery index (inflation plus unemployment) under Carter in 1980 was at its highest point since Roosevelt. Also, interest rates were at a staggering 18 percent.

I was a working adult in the late 1970s, and I assure you that they were "lean" years ... 10 times worse than the 1980s.

[opebo]

Keep in mind that the misery index (inflation plus unemployment) under Carter in 1980 was at its highest point since Roosevelt. Also, interest rates were at a staggering 18 percent.

I was a working adult in the late 1970s, and I assure you that they were "lean" years ... 10 times worse than the 1980s.

Sure, things were fairly bad in 1980, but things were good in 1976, 1977, and 1978.

[Frodo]

According to a number of Wall Street analysts, this August.  Being a bit more pessimistic, I would guess either the 4th quarter of this year or the 1st quarter of the next year. 

[Kaine for Senate '18]

I'll say Q3 of 2009.  That may be a little optimistic, though.

[k-onmmunist]

Q3 or Q4, most likely the latter.

[War on Want]

I am thinking that it will end in the first quarter of 2010.

[Rowan]

Never.

[Senator Robert A. Taft]

Sometime in either 2011 or 2012.

[Small Business Owner of Any Repute]

sometime around when i shoot myself in the head

[Sam Spade]

sometime around when i shoot myself in the head

Guess that means job search not successful?

[Fmr. Pres. Duke]

We might have a positive GDP number before the year is over, but once the negative effects of the stimulus come to pass, we should see a relapse.

[Mint]

We might have a positive GDP number before the year is over, but once the negative effects of the stimulus come to pass, we should see a relapse.

This with an emphasis on might. I'm not even convinced of that despite all the hype. I see no indication that the central problems surrounding our our economy crisis (namely, what will happen to all of the debt and useless assets) are being resolved despite all of the hoopla over the TARP. Most of Obama's economic policies appear to amount to expensive band aids to be blunt.

[CARLHAYDEN]

We might have a positive GDP number before the year is over, but once the negative effects of the stimulus come to pass, we should see a relapse.

This with an emphasis on might. I'm not even convinced of that despite all the hype. I see no indication that the central problems surrounding our our economy crisis (namely, what will happen to all of the debt and useless assets) are being resolved despite all of the hoopla over the TARP. Most of Obama's economic policies appear to amount to expensive band aids to be blunt.

Mint,

You're too kind to Bush and Obama.

What they did was inject massive doses of highly addictive (and destructive) economic narcotics into the system.  While some people (those getting the bailouts) may temporarily 'feel' better, the fundamental problems have not been addressed.

[Magic 8-Ball]

I went to a Bank of America presentation in early October; it's preparing for a five-year recession.  Then again, those guys seem to have awful foresight.

[Beet]

The recession will not end this year. By the end of the year, it will become apparent that the Obama administration will not be able to solve the country's problems, just as it became apparent that Jimmy Carter would not turn the country around by the end of 1977.

The majority of credit losses in prime housing, commercial real estate, and credit cards lie in the future. The so called "stress tests", which were supposed to predict these losses, were badly flawed for multiple reasons. They used the banks' own flawed data rather than independent auditor data; they used the wrong measure of capital; they were too generous in their assumptions of future economy activity. The government is already backtracking or changing some of the rules of the game that applied back when the results were released on May 7.

The contraction of credit lines and the return of credit card rules to pre-1980s standards, while admirable in their restriction of usury, come at a bad time and will only serve to further inflame the contraction of consumer purchasing power that is already collapsing due to the free falling jobs market and the reverse wealth effect. Of what purchasing power remains, a greater percentage will be saved. As a result, consumer spending will come in below expectations and continue to fall throughout the year. This will cause businesses to continue to cut back; which will causes more job losses in manufacturing, and so on and so on.

The monetary efforts of the Federal Reserve are a joke. While I am not necessarily opposed to quantitative easing, lower marginal interest rates in the face of collapsing income will not save the housing market, since consumers' ability to afford housing is tied at least as much to their income as it is to their ability to borrow. The idea that Bernanke does not understand this basic fact is impossible to believe, but it is also impossible to believe that the housing market can be revived solely by low interest rates in the current macroeconomic environment. Quantitative easing would be better put to use on direct job creation.

Some economists claim that weekly unemployment claims peaking is a sign that things are about to turn around. Weekly claims have dropped from about 650,000 to 625,000. Woo. Huge drop. Meanwhile, the total employment level is falling off rapidly. A 675k monthly job loss at an employment level of 135 million represents a 0.5% fall in employment. A 625k monthly job loss at an employment level of 125 million represents a 0.5% fall in employment. The lower the total employment level goes, the smaller the weekly or monthly employment loss needs to be to represent the same proportional drop. Therefore, marginal drops in claims or monthly net losses do not necessarily represent a fall in the "second derivative."

The economic stimulus package is a joke. It promises to create or save 2 to 3 million jobs over the next 2 years. But we are losing 2 to 3 million jobs every 4 to 5 months, on top of the roughly 5 million already lost, and the millions of people who join the workforce every year. We need a stimulus package that creates 5 to 10 million jobs. There are no signs we will get one.

The PPIP and TALF are jokes which are mostly by now on indefinite hold.

In short, none of the government's actions, nor any of the indicators supposedly pointing to a recovery, addresses the multiple of problems that lie ahead. We are in for a long term debt deflation unless and until more drastic actions in policy and changes in direction of policy are undertaken.

[Swing low, sweet chariot. Comin' for to carry me home.]

The recession will not end this year. By the end of the year, it will become apparent that the Obama administration will not be able to solve the country's problems, just as it became apparent that Jimmy Carter would not turn the country around by the end of 1977....[long list of unsolved problems]

you're philosophy may be correct, but you're allowing it to override tangible clear signs that a recovery is fast approaching.

"The ECRI Weekly Leading Index increased slightly to 111.9 for the week ending May 22 from a revised 111 (previously 111.1). The smoothed, annualized growth rate increased to -9.3% from an unrevised -11.5%."...."ECRI's Weekly Leading Index (WLI) is a composite index constructed of seven USA weekly economic series (M2, JOC-ECRI industrial materials price index, initial unemployment insurance claims, mortgage applications, S&P 500, 10-yr Treasury bond yield, and bond quality spread)."

There has never been a case where this large of an upward trend of the aggregate of those leading indicators didn't correctly foretell a recovery.  Period.  Does that mean we're about to enter a muiti-year period of growth?  Absolutely not, for the numbers can only foretell the next 6 months.  But the signs are very clear - baring war or an act of God, there is a very high probability that the current quarter will be the last of the current recession.

[Swing low, sweet chariot. Comin' for to carry me home.]

The recession will not end this year. By the end of the year, it will become apparent that the Obama administration will not be able to solve the country's problems, just as it became apparent that Jimmy Carter would not turn the country around by the end of 1977....[long list of unsolved problems]

you're philosophy may be correct, but you're allowing it to override tangible clear signs that a recovery is fast approaching.

"The ECRI Weekly Leading Index increased slightly to 111.9 for the week ending May 22 from a revised 111 (previously 111.1). The smoothed, annualized growth rate increased to -9.3% from an unrevised -11.5%."...."ECRI's Weekly Leading Index (WLI) is a composite index constructed of seven USA weekly economic series (M2, JOC-ECRI industrial materials price index, initial unemployment insurance claims, mortgage applications, S&P 500, 10-yr Treasury bond yield, and bond quality spread)."

There has never been a case where this large of an upward trend of the aggregate of those leading indicators didn't correctly foretell a recovery.  Period.  Does that mean we're about to enter a muiti-year period of growth?  Absolutely not, for the numbers can only foretell the next 6 months.  But the signs are very clear - baring war or an act of God, there is a very high probability that the current quarter will be the last of the current recession.

some more analysis of the report...

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[Small Business Owner of Any Repute]

sometime around when i shoot myself in the head

Guess that means job search not successful?

The unfortunate side effect of seeking a job as a creative professional is that with such a job-seeker glut out there, employers can find exactly what they're looking for, and are then generally able to name their own price for it.

I had the inside track on a job at an architecture firm as a marketing manager, a position I held at another, larger firm in the area. I wound up getting passed over because they found someone who already had experience as marketing manager at an architecture firm.

I spoke with an expert (in the local Boston job market, anyway) a few months ago, and they reiterated what everyone else could tell you: The job market fell off a cliff late last year. They didn't see things getting much worse going forward, but they also didn't see things getting much better anytime soon. Permanent hirings are off, and companies are reluctant to even spend on temps.

Some companies have laid off people because they have to lest they bleed red ink; other companies have laid off people because everyone else around them has; and still others are just deciding to put a simple hiring freeze out there. Most job postings are for essential personnel only, and they're getting away with paying less. (Long term, this strategy stinks and slaughters employee morale, thus hurting productivity. But whatever, it's business' sworn duty to overreact to every economic downturn that comes along, making things that much worse.)

The job situation is not dire, at least in that I could probably find a job in a reasonable time frame if I lowered my standards.  The simple fact of the matter is that the unemployment payments I'm getting are generous enough to rule out most of the opportunities that I've run across. Thanks for the $25 stimulus bump, Big O. And thanks for covering 90% of my COBRA, Deval.

I've resigned myself to a long-term unemployment filled with occasional freelance work. That seems to be the new employment trend. Pay-as-you-go without a long-term contract.

[I spent the winter writing songs about getting better]

I sometimes wonder if I have the only job which is still hiring like mad. Of course part of the reason for that is that we have a pretty high turnover among new hirees. In only about 4 months from when my training class started, half were already gone, and we're now down to only 7 out of 25 at the time. It's tough to tell only via tests or interviews if one can do the job though, so simply hiring a ton and then keeping only those who prove they can might be a good strategy.