Surprise! We're officially in a recession
Posted
Dec 01 2008, 12:44 PM
by
Kim Peterson
Rating:
In case anyone wasn't sure, we are now officially in a recession. That's according to the National Bureau of Economic Research, which met on Friday and determined that the current recession began in December 2007.
It may have not seemed like a recession at the time. That's because the U.S. hit a peak in economic activity during that month. Employment was at a high, and other indicators, such as manufacturing and production, were also approaching peaks. But the long slide down began then.
It's pretty clear now that we are in a recession, but experts weren't sure exactly when it began. The bureau's report gives a definite starting point. And signs point to a more severe recession in the Midwest -- in fact, it could be as bad as the recession of 1981-1982, according to professors at Creighton University.
On top of all this is word that U.S. manufacturing is contracting at the fastest pace in 26 years.
Investors are reacting to recession concerns by flocking to treasuries, but now treasury yields are so low that fund managers "have little chance of offering anything but subpar returns in 2009," according to Bloomberg.
Airlines are reacting to the recession by cutting capacity. Airlines have already cut seating capacity by 10%, and may cut another 8%, according to Blomberg.
So when will the recession end? We won't know until we're long out of it. Economists will have to analyze several months of indicators to pinpoint the moment when the economy started expanding again.
In fact, we could already be out of the recession now. The typical postwar recession has lasted 10 months. But it sure doesn't feel like the economy is in expansion mode these days.
