Recession in U.S. lasted 18 months

Sept. 21, 2010

The NBER has finally pronounced on the end of the U.S. recession. It lasted 18 months beginning in December 2007 and ending in June 2009.This makes it the second longest recession since the great depression of the early 1930s. Since June 2009 the recovery has been rather slow and somewhat weaker than usual particularly in terms of rehiring laid off workers and the slow drop in the unemployment rate. Part of the explanation is the sheer ferocity of the downturn accompanied as it was by the near total collapse of the financial system.

The other explanation is probably found in the somewhat too small size of the stimulus and the slowness with which the money has been spent. Even now there remains substantial stimulus money that has not yet been spent into the economy. The government has spent about 81 % of the monies allocated to tax benefits, 55 % of the  infrastructure money in contracts , loans and grants and  about 65 % of the monies allocated to entitlement benefits to date. The total monies spent amount to 529 billion of the 787 passed by congress or 67 % of the totals of September 10, 2010.

For the view of Jeff Frankel, a member of the NBER committee that made the pronouncement see http://content.ksg.harvard.edu/blog/jeff_frankels_weblog/2010/09/20/nber-eggheads-finally-proclaim-end-of-recession/