Unemployed Benefits Expired, Creative Commons image, Blue Jay Day, FlickrThe recession is over. A couple weeks ago, the Business Cycle Dating Committee of the National Bureau of Economic Research met in September and determined so. I assume that recession is a specific economic term, with a specific definition and a specific formula for determining it. I'm not an economist, so I can't tell you if the definition or formula is the best one. That's for folks smarter than I am to debate. What I did notice, though, was that the committee makes public not only a report on its findings, but also a spreadsheet of the data used.
In the weeks since, I've been reading comments on news articles about this. And listening to interviews about it. Many people stated that the recession can't be over, because there are still a lot of people looking for jobs. Even Warren Buffett, someone I respect greatly (that "smarter than me" principle), shared his own take on the recession.
Maybe I'm wrong. Maybe the term recession is not a well-defined one. It seems like a lot of people have some valid (and some not-so-valid) reasons for why the recession is not over.
The way my brain works (scary topic) is that I try to find analogies for things I want to work out. How does the same set of rules and/or parameters exist in other situations?
I live in Central Oregon. We spend summers here watching and worrying about forest fires (another scary topic). If we drive in any direction, within an hour or two, we'll pass through an area of charred trees. A forest fire burned there once. It's my analogy for the recession. As I drafted this post, I realized it applies in more ways than I expected.
- Forest fires burn. Fire crews try to contain them. And then at some point, those crews succeed and the fire is extinguished. Who gets to decide the fire is out? By-standers? People who lost homes? Squirrels? (Squirrels!) No. The fire commander and/or the officials involved in fire management, those who have the data, get to make the call. Maybe we should let the people with the experience and the data determine the same for recessions.
- Current federal forest policy plus a whole host of other complications seem to have contributed to a rise in the number and severity of fires. As an observer, forest fires look scary as hell and utterly destructive to me. Especially as they endanger animal habitats or human neighborhoods. But policy makers and scientists spend a lot of time debating whether forest fires have benefits. This seems to be true with recessions also. It's hard to see any benefits when you have friends and neighbors out of work but, in a macro-economic sense, trimming the fat every once in a while might be valuable.
- When forest fires are extinguished, the landscape that remains is bleak. The fire has stopped burning, but the new life has not yet sprouted. The animals have not returned. Humans have not rebuilt homes. Back to the recession again. The recession is over. Hopefully for good. Or at least for a few decades - until it's time to trim the fat again. But, it will take time for rebuilding. Trauma has to end before recovery can begin. In most cases, I would argue that they are successive events, not simultaneous ones.
I'm not proposing that I, my family and friends, people on the street, and especially not Warren Buffett, are not entitled to our opinions. I have many and share them often. Ask around.... What I do propose is that we try to share some common language. Saying, "the recession is over" doesn't mean the same as saying, "Hoo-rah! Our economy's rocking!" My hope is that saying "the recession is over" means that we can finally say, "Let's get to work rebuilding."
Pacific Crest Trail: Santiam Pass-Rockpile Lake, Creative Commons, abrahamhyat, Flickr