Monday, September 20, 2010

It's official! The Recession is over...Just in time for the second dip?

The National Bureau of Economic Research (NBER) has long ago deemed itself as the official determiner of recessions--when they begin and when they end.  Today, they have announced--that which I have been saying since at least March 2010 is true--that the recession ended in June 2009.  Here is the link.

So with this incredibly after-the-fact announcement, we find ourselves with national unemployment at 9.6% and North Carolina at 9.7%.  Additionally, we are seeing that the housing market is collapsing (again).  More importantly, we see that firms are expecting the other shoe to fall soon.  The Fed has done more than most thought they would.  The stimulus has now proven to be a failure.  The national debt is sky high.  Social Security, Medicaid and Medicare are unsustainable.  In the face of this, the federal government is burdening the economy with more rules, regulations and taxes.

I am certain that we are in a pause between two painful economic episodes.  Many expect the next election will sort everything out.  I am not quite so hopeful.  The country does need to turn back toward that which works--markets.  However, I do not see that turn any time soon. 

Initially, the Great Depression was merely a bad economic downturn.  In fact, it wasn't even as bad as the initial drop in 1920.  In stepped Hoover and made a bad situation worse.  He turned the country away from markets and sent us down the wrong path.  FDR campaigned against Hoover's crazy spending, but unfortunately not only did he not keep his promise, he increased spending and regulations! 

If we can survive FDR's National Recovery Act, we can survive the current federalization of the economy.  The question is how long will it be until we realize that this path leads us to failure.  How long will it take until we turn back to markets and prosperity?


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