Oracles Declare Recession Over: Prepare to Feel Statistically Better
Yesterday, Fed Chairman Ben Bernanke announced that the recession is "very likely" over, and Warren Buffett and Rupert Murdoch have agreed. Good news, except most of the bad things about recessions keep on going after they're over.
Bernanke said yesterday that he expects growth to return to the economy this year, which Time's Justin Fox points out isn't really news, since he said virtually the same thing last month. But the news narratives must be forged, so for some reason this time we're taking it seriously. Buffett told CNBC this morning that we've "hit a plateau at bottom," and Murdoch says he thinks the economy is "going to get a nice bump."
But all three men issued warnings that the the recovery will be slow, painful, and jobless. Here's Benanke:
Even though from a technical perspective the recession is very likely over at this point, it's still going to feel like a very weak economy for some time as many people will still find that their job security and their employment status is not what they wish it was.
In other words, the arbitrary statistical measures that we've decided to use to judge the health of the economy tell us that the recession is over, but most of the real-world measures that actual people use to judge the health of their economic lives—whether they have a job, can count on keeping the job, and make enough money from the job to live on—are still tanking. It's kind of like a pilot emerging from wreckage of an air disaster and announcing, "The plane crash is over!"
Terms like "recession" are obviously useful to economists and bankers, but they fail to capture the reason they are actually bad. So maybe we should come up with a new word to reign in the sort of statistical chicanery that permits headlines saying RECESSION IS OVER when unemployment continues to stand a hair under 10 percent and likely will for months and months to come. "Mancession" is already taken, sadly. How about "realcession"?