by Doug Henwood

The U.S. economy continues its noble attempt to find its feet, with mixed success. In the “no kidding” department, the Business Cycle Dating Committee of the National Bureau of Economic Research—a panel of eight economists who are the official arbiters of recession and recovery for the U.S. economy—declared on September 20 that the Great Recession ended in June. Not June 2010, but June 2009. This may surprise a civilian audience in at least two ways. First, what took them so long? The answer is that they really really want to be sure, and a 15 month delay is actually about average. And second, the news that the recession is over may strike some people as strange. There were over 300,000 fewer jobs last month than when the recession officially ended in June 2009, the unemployment rate is a tenth of a point higher, and the share of the adult population with a job is off by almost a full percentage point. (The unemployment rate would be a lot higher
if people hadn’t dropped out of the labor force.)

But, you know, GDP. Real GDP, that is the total value of goods and services produced in the U.S adjusted for inflation, stopped shrinking in the middle of last year and is up a miserable 1.7% since then. And since, to a bourgeois economist, the economy is about money and not people, the recession is over. Doesn’t that make you feel better.

Speaking of miserable, the housing market, which led us into this mess, isn’t showing much leadership in getting us out of it. July’s housing figures were uniformly awful. August’s, which we’re just now getting, are coming in a little better. As Economy.com’s Dismal Scientist service put it on Thursday morning, “August sales of existing homes recovered somewhat from the July free fall, but this gain only brings the pace of sales up to the high end of miserable.” But applications for new mortgages have been down for the last several weeks, and the Federal Housing Finance Agency’s price index, released the other day, was off by 0.5%. That’s a July number, though, so maybe that’s just a relic of a really bad month.

But first-time applications for unemployment insurance, filed by people who’ve just lost their jobs, rose 12,000 last week following two weeks of decline. Right now, this number seems trendless, up one week and down the next, but stuck at a high level. The job market is off life support, but it’s not bounding out of bed and ready to run a half-marathon, either.

And the Federal Open Market Committee, the group within the Federal Reserve that sets monetary policy, met earlier in the week and decided to keep the spigots wide open. They’re still concerned that the recovery is weak. Further, their statement expressed discreet worry that the economy was in danger of sinking into deflation, a period of falling prices and shrinking activity that almost no one but the most extreme sadomonetarist would enjoy.

from LBO Notes