Are We There Yet?

As the nation plods along during what is a quite long recession citizens begin to ask whether or not the downturn is over. The questions are similar to those asked by a child pestering their parent during a long car trip - 'are we there yet?' Almost since the start of the economic decline people have been asking when or where the end is, especially those in the media. Obviously, no one wants to experience an economic downturn. However, hope and questions alone will not make it go away. Like the parent in the car being continuously asked if they have reached their destination, the answer to the economic question is very simple.

The children never seem to understand that they will know when they get to where they are going. Similarly, people in a recession will know when it is complete. While officially only NERA can dictate the timing of a recession, the true end is much more obvious. Factories will open, spending will increase, jobs will be found; just like that - the recession will be over.

I, for one, feel that the economic data released today by the Commerce Department marks a clear end to the recession which lasted from December 2008 until sometime around January-March 2010. Their report shows that the US Gross Domestic Product grew by 3.2% on an annual basis in the first quarter of 2010. Combined with reports showing that consumers are starting to increase their spending and declines in the unemployment rate the GDP numbers provide ample evidence to show the recession to be ending (or possibly over).

While questions can be raised over each of the individual numbers, the combination of all factors makes for a convincing argument that growth can soon restart. What must be done now is simple - impediments to growth must be removed. Specifically the government must be very careful in their fiscal and monetary policies not to retard growth in any way. The economy is still quite weak and the recovery does not have much steam. However, if barriers are not erected growth can soon resume.