Consumer confidence is stumbling, the stock market is tumbling, and unemployemnt is soaring. We’re now 14+ months into a severe recession, and the news just seems to keep getting worse. When will it all end? It’s hard to say for certain, but economic experts have made their share of predictions. But before we talk about that, let’s talk a bit about what constitutes a recession.
What is a Recession?
According to Wikipedia, a recession is “a decline in a country’s gross domestic product (GDP), or negative real economic growth, for two or more successive quarters of a year. Some economists prefer a more robust definition of a 1.5% rise in unemployment within 12 months.” Whichever definition you prefer, we’re living it.
Since 1854, we’ve had 32 cycles of economic expansion and contraction, with an average of 38 months per expansion and 17 months per contraction. Since 1980, however, there have only been eight period of negative economic growth that have lasted for one fiscal quarter or longer, and just four of those have been recessions. In the early 1980s, we had a 17 month recession, in the early 1990s we had an nine month recession, in 2001 we had another nine month recession, and now this.
When Will the Recession End?
While there are no concrete answers as to when the current recession will end, a recent survey of leading economists has provided some insight into what we might expect. According to the survey, which was conducted by the National Association of Business Economics, the recession is expected to worsen during the first half of 2009. However, things will start to look up in the second half of 2009, and we should see a solid recovery in 2010.
Are they right? Only time will tell. But it’s worth noting that data from the New York Fed are likewise pointing to an end of the recession sometime during the middle of this year. Keep your fingers crossed.