The Recession is Over! Long Live the Recession?

If you’ve been following the news or the blogs, you already know that the recession is over. Indeed, it’s been over since June 2009. Woo-hoo? Jon Stewart’s take is particularly amusing, though not amusing to all economists. So, the recession is over… what does that really mean? Is unemployment shrinking at a noticeable rate? Is the typical person better off? Income inequality is still soaring.

I’ve written before about some of the problems with a binary concept of recession. I think Mark Thoma has the right idea – we should be looking at alternatives to the “official” NBER Business Cycle Dating Committee measures. Why does NBER get to officially arbitrate recessions anyway? While Jon Stewart is right that NBER is non-partisan and nerdy – both good things here! – they still are a small minority with a very distinct disciplinary perspective.* Perhaps we should even abandon the notion altogether. Why imagine that the economy is so uniform and homogeneous that everyone and everything moves together? Why not encourage a multiplicity of measures and a more nuanced understanding of all the pieces of this vast machine we call the economy?

It’s not like people believe the NBER measures right now anyway, at least not entirely. While the commentators are right that all NBER is saying is that things have stopped getting worse, and started getting slightly better, I think we are letting them off the hook too easily. Better for whom? For everyone? I doubt it. If income inequality is soaring, then odds are good that many of the apparent increases in output and such are being driven by gains at the top, but that stagnation or decline persists in the middle and bottom. This trend is not new – see Hacker and Pierson – but I doubt the current recession halted it much.

* Sandra Harding might call this a problem of weak vs. strong objectivity. That is, NBER is not cooking the books to give an advantage to a particular politician or anything of that sort, but they do exist within a particular discipline and world-view which takes into account some factors and ignores or devalues others.

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