The National Bureau of Economic Research’s (NBER) Business-Cycle Dating Committee (BCDC) has been desperate to declare an end to the so-called "Great Recession" since June 2009.  The only problem is that by most honest metrics, The Affordable Mortgage Depression has yet to conclude.

An Academic Definition Applied to Dynamic Economic Circumstances

The BCDC's preferred definition for a recession's end includes positive GDP trends, improving industrial production and increased hiring.  Simply put, economic expansion (regardless of circumstance) means that a recession is over. 

The problem is that economic output is easy to manipulate through deficit spending.  The Federal Government is presently running $1.5 trillion annual deficits.  Debt-financed spending is by definition stimulative; boosting both GDP and corporate production/profitability.  Record stimulus spending combined with loose monetary policy and record low interest rates have generated the conditions necessary for the BCDC to declare an end to the recession more than a year ago.

But this subsidization is unsustainable, and growing GDP would be flat or negative if the Government wasn't engaged in a historic effort to prop up the economy.  As observed previously, based on the BCDC's rigid definition, the United States need never again suffer a recession through "the magic of deficit spending"!  (Link to Article: "A Fundamental Question Posed to the National Bureau of Economic Research’s Business Cycle Dating Committee")

The Great Depression Apparently Did Not Qualify as a Recession

According to the NBER the recession which birthed The Great Depression ended in March 1933.  I am sure it came as great comfort to the 24.9% of Americans who were unemployed at that time that the economic malaise was over.  The BCDC maintains that for more than four years until May 1937 the United States was not in a recession. 

NBER ignores high unemployment during this period and fails to consider flaccid economic expansion relative to the steep drop in production which preceded.  Furthermore, the BCDC does not acknowledges that it was New Deal initiatives (primarily Social Security and higher taxes) implemented in a misguided attempt to elevate the nation out of The Depression which hurled the economy back into the "technical" definition of recession (The Roosevelt Recession 1937-1938).

Only a hopelessly flawed and academic organization like the NBER could declare a recession to be over while The Great Depression continued unabated.

Act II

Today The National Bureau of Economic Research is repeating its failures of the 1930s.

As in 1929, 1933 and 1937 the Federal Government is worsening an economic Depression with its debilitating public policy response.
 
How politicians may turn a recession into a depression:

• Encumber the economy when dynamism is the best route out of the malaise
• Erect impediments to the vital market clearing function ensuring that the downturn will linger
• Burden the private sector, the source of wealth creation, with soaring debt, crushing regulation and incremental costs
• Increase volatility, uncertainty, complexity (risk) while reducing after-tax operating profits (reward), thus ensuring that less capital is available to create fewer businesses which higher a smaller number of employees
• Instead of reducing already inhibitive and uncompetitive tax rates, massively increase the private sector tax burden

For the past 18 months the Democrats have been hard at work manufacturing what history may deem "The Obama Recession".  Regardless of technical definition, The Affordable Mortgage Depression continues unabated driven by fundamental forces, but augmented by the consistently misguided public policy response of the last two Presidents and Congresses. 

Just as in 1937, the current President is implementing New Deal-like public policy which is inhibiting the economy's ability to reorder and recover.  Poorly designed and unaffordable welfare programs, restrictive regulation and looming tax hikes will further weaken the economy and may even convince the obtuse BCDC that we are in a Depression.

Though Doth Protest Too Much

The National Bureau of Labor Statistics commentary today is somewhat reminiscent of that expressed by the Harvard Economic Society during The Great Depression.

2010

The U.S. labor market’s “weak and faltering” recovery doesn’t imply the economy is sliding back into a recession and may instead reflect productivity gains - Stanford Economist Robert Hall, Head of the National Bureau of Economic Research's Business Cycle Dating Committee

"So far, there has been no second dip” - Robert Hall

“So these considerations make me remain optimistic that output growth will be continued and will start to spill over into employment growth.” - Harvard Economist James Stock, BCDC Committee Member


I note that yesterday it was announced that productivity fell this spring for the first time since 2008.  (Link)  Today is was announced that private sector job openings shrank for the second straight month a signal that hiring will not pick up anytime soon.  (Link)


"it’s clear the contraction has probably ended"  - Comments attributed to Jeffrey Frankel (Harvard) and Robert Hall by Bloomberg

“a drop in GDP after the current quarter should be classified as a new recession rather than a continuation of the 2007-2009 downturn”  - Northwestern Economist Robert Gordon, BCDC Committee Member

1929 - 1931

"...despite its severity, we believe that the slump in stock prices will prove an intermediate movement and not the precursor of a business depression such as would entail prolonged further liquidation..." - Harvard Economic Society (HES), November 2, 1929

"... a serious depression seems improbable; [we expect] recovery of business next spring, with further improvement in the fall." - HES, November 10, 1929

"...there are indications that the severest phase of the recession is over..."
- Harvard Economic Society (HES) Jan 18, 1930

"... the outlook is favorable..."
- HES Apr 19, 1930

"...by May or June the spring recovery forecast in our letters of last December and November should clearly be apparent..."
- HES May 17, 1930

"We are now near the end of the declining phase of the depression."
- HES Nov 15, 1930

"Stabilization at [present] levels is clearly possible."
- HES Oct 31, 1931