Captain Obvious to World: America's In a Recession
Now that it's official, what can the average person expect?
Yesterday, the National Bureau of Economic Research (NBER) confirmed what analysts, the unemployed and garden slugs have known for months: America is in a recession.
And the sound you heard echoing across the globe was a billion sets of eyeballs rolling.
According to official calculations, the downturn can be traced back to the final gasp of a 73-month economic expansion in December 2007. The Cambridge Group pinpointed the recession's exact origin by combing through data on production, employment, personal income and sales.
On the heels of the news, the Dow Jones Industrial Average tanked 7.7%, closing the day down a whopping 680 points. The plunge followed a week-long upswing in the stock market that was capped by a better-than-expected Black Friday.
It's hard not to wonder what took the NBER so long? After a year full of crystal-clear indicators -- everything from a housing crisis to a credit crunch to federal bailouts to rising unemployment to decreased consumer spending -- it's akin to a referee calling a foul in the fourth quarter, when the star point guared had his nose broken before halftime.
But our collective energy is better channeled looking forward, not backward. Solutions and understanding should be the catch of the day. So, what does a recession mean for the average person?
Minyanville Executive Editor Kevin Depew noted an important connection between the NBER's economic findings and the reaction of the stock market. "Typically, the announcement of the official recession date marks a stock market bottom," he said. "It's not the their fault, it's just that this kind of economic data is backward-looking and not forward-looking."
However, he thinks the current slump will be altogether different from past slowdowns.
"I really think that unlike past recessions -- 2001 and the early 1990s -- this one's going to be much longer and deeper, and that's where it affects the average person on Main Street."
How, exactly? Even more vacant storefronts? Even fewer job opportunities? 401(k)s battered worse than in years past? The degrees of severity may change, but the effects remain the same.
But what about the length of those effects?
"This is going to be one of those situations where the average person looks back and thinks, 'Just when we thought it was over, it was really only beginning.'" Great.
But every valley has a peak: The nation is poised to emerge from this slump stronger and wiser - and the work it takes to get there may even prove rewarding.
"The good news is, America's going to be a much better place on the other side -structurally, economically and socially."
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