The Recession is Over!

The Great Recession of 2008-2009 is over, at least according to one expert. Economist Robert J. Gordon says the economy has hit rock bottom and that everything is uphill from here. Usually, these kinds of pronouncements are made after they have become painfully obvious, such as when the government pronounced the country was in a recession several months after everyone already knew we were. Gordon says things have gotten about as bad as they are going to get.

But, not so fast. Now, I'm not an economist, and Gordon is certainly smarter than I am when it comes to matters of the national economy, but I live in the "real" world. Even though I have chosen not to participate in the recession, it is still impacting all of us. We are all paying higher prices for everyday necessities, like food. The housing market is still in the dumper. My clients at work still complain about lower revenues.

So, how will we know when we are REALLY out of the recession? I think we should look at three indicators:

Employment will go up significantly. When we see jobs coming back in a real way, we'll know we're on our way out of the recession. Right now, unemployment is still climbing, and is expected to until 2010. I think we can see the beginning of the end of the recession sometime next year.

The housing market will rebound. I highly doubt we'll see the kind of housing speculation and investment we saw a couple of years ago for quite some time, when even reality shows were featuring "house flippers". But, if you see new housing construction start to increase and some of the houses that have been languishing on the market start to sell again, we'll be climbing out of the recession. Will banks and mortgage lenders have learned their lesson and not sell houses to those who are not qualified? One would hope so.

The stock market will recover. When the housing market starts to recover and banks stop failing, we should see the stock market start to make a comeback. When investors start trusting the market again, we'll see the stock market climb and businesses beginning to make investments and hiring workers.

Not everyone will enjoy a recovery. Some businesses will not recover. More banks may fail. Major employers, like General Motors, may not look the same as they did a few years ago. That's not necessarily a bad thing. In the business world, it's survival of the fittest. If businesses are operated lean and they have good management, they will weather the storm and possibly come out stronger than before. Other businesses and retailers may fail, and be replaced by something better. That's the way it has always been, and this recession is no different.

How much longer will the recession last? This one has already lasted longer than most recessions, and for that reason I suspect it won't go on much longer. Perhaps we'll start to see some real improvement and recovery in mid-to-late 2010, but of course it won't happen overnight. Recovery will be a process that may last the next few years.