They thought the worst was over, too.
It is over? Is the Great Recession over?
I don’t know. Neither do you, and anybody who says they do know is selling something.
There is absolutely no other honest answer. In journalism, you are discouraged from giving such an answer. Right or wrong, you are supposed to take a position and craft an argument that backs it up. That’s probably a relic of the Voice-of-God days for newspapers.
But with unemployment still rising, with consumers cutting back on spending and borrowing, with the biggest banks in the nation still operating by the grace of government largesse, with foreclosures still rising, with companies still getting smaller and holding off on any notions about hiring, who can say whether we’ve turned the corner based on three months?
Yesterday’s GDP report had some anxious types declaring the recession’s end. Yes, economic activity increased in the three months from July through September. But how was that achieved, and can that be sustained? It was achieved mainly through government spending. Is that sustainable? Well, it is in command economies.
It’s hard to know how bad the storm is when you’re standing in the middle of it. There were plenty of false dawns during the Great Depression.
First off, there is no “official” marker that ends a recession. The group that makes that call, the National Bureau of Economic Research’s dating committee, looks at a range of factors, one of which is GDP, and they will wait a long time before making the “official” call. That’s because they want to see if the recovery sticks, or if the nation slips back into recession. In that case, they’d likely declare the entire period one long recession.
“No, it is far from automatic,” Harvard’s Jeffrey Frankel – a member of the dating committee – wrote in an email, replying to my question of whether the GDP report marks an official end to the recession. “Still, it is very encouraging.”
The Times’ Joe Nocera had a good take on this a few weeks back, writing about “The Great Depression: A Dairy,” a new book that collects the dairy entries of Ben Roth, a Youngstown, Ohio, lawyer back in the ’30s.
“What particularly struck me was watching Mr. Roth, in his diaries, grope from day to day, and year to year, searching for an answer that wouldn’t be clear until long afterward,” Nocera writes.
The Joliet, Ill., public library put up an absolutely fascinating webpage, chronicling the headlines in the local Joliet Herald-News during the ’30s, and the myriad predictions that the worst was past, even as eight, nine and ten years remained until the Depression would finally end.
From December 1930: “Bright Hope For Future Is Seen In Prediction; Contention Is That When Nation Steps Backward It Will Progress; Expect Boom.”
From May 1931: “Business Tide Is Coming In, Schwab Says; Steel Magnate Believes Liquidation Is About Over.”
From March 1932: “Track Clearing For Return Of Better Times.”
They all turned out to be false dawns. There’s a line from an early Bruce Springsteen song that’s been ringing in my head this morning. “Well the runway lies ahead like a great false dawn.”
Who can say the worst has passed?
(Images: Joliet Public Library)
LarryIowa
Praxis22
October 30, 2009
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