Floyd Norris highlights a survey that implies globally, the recession is over:

The worldwide recession appears to have ended, with surveys showing manufacturing activity is on the rise nearly everywhere.

“It is the emerging markets that are leading, with the U.S. following and Europe lagging,” said Chris Williamson, the chief economist of Markit, a company that surveys manufacturers in many countries.

Regular readers know my aversion for asking Humans questions, and then drawing big conclusions. We tend to read too much into the answers, which history has shown to be unreliable.

Still, the surveys “have a reputation for showing turns in the economy, often before other indicators do.” The chart (below) implies things are not only less bad, but actually starting to improve in places.

I remain less than fully convinced, but willing to recognize that in some sectors and regions, the economy is improving. For example, luxury spending jumped 29% this quarter from last. (Most be that $23B in Goldman bonuses getting spent!)



Chart courtesy of NYT


By Some Reliable Measures, Recession Is Over
NYT, October 16, 2009


Category: Economy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

37 Responses to “Is the Recession Over?”

  1. Rikky says:

    improving is an overused term during this crisis. if last year i made $100 million and this year i made $10 million then next year i made $14 million that’s a 14% “improvement”. there is no ‘going back’ since the us consumer is incapable of taking on an additional $25 trillion in debt and the government can’t play hide the sausage forever. i believe going forward we’ll continue to see structural high unemployment in the USA (8-9%) coupled with increasing propaganda on the positives from TPTB all while the vast majority of Americans continue to suffer via death by a thousand cuts.

  2. Marcus Aurelius says:

    We (meaning, in this case, TPTB) didn’t recognize the recession until it was 2 or 3 quarters old. Now, the same people are prematurely (and, in my mind, dishonestly) saying that it’s over. What would motivate them to do such a thing?

    Who ya’ gonna’ believe – people who would benefit should you believe what they’re telling you, or your own lying eyes?

  3. Steve Barry says:

    Hardly over IMO…we now have record federal deficit…record total credit per GDP…record foreclosures and many more in the pipeline per Cyclepro:

    “US banks were hit hard by the subprime default meltdown. But an even bigger default opportunity awaits during summer-fall of 2010 and another larger wave in 2011. These are the Option-ARM and Alt-A rate resets. Combined, these are as big (in dollar volume) as subprime was last year. 2009 is simply the mortgage default scenario taking a breather. This is a lull while the news media is scrambling to find evidence of a non-existent recovery. The 2010 and 2011 reset waves should have a much bigger impact on banks than the subprime bomb.

    The subprime event hit when banks were weak, but not yet crippled. Now many are crippled from it. FDIC bank failures are increasing. As we go through the 2010 wave with option ARM and Alt-A resets the banks will be hit while they are weak and undercapitalized. With almost no time to recover, the 2011 wave will hit and an even weaker banking system will be hit harder yet. It could result in a knockout. The Alt-A mortgage holders may not be as weak as sub-prime, but the option ARMs are just as weak. It does not matter, the dollar amount of these mortgages are similar to subprime in overall magnitude and much larger on a per-mortgage basis.

    If residential mortgage defaults were not potentially damaging enough, there is also the commerical real estate loan defaults looming large. By analogy, the Option-ARM/Alt-A events are like large waves on an open sea — the commercial event is like a rogue swell that is substantially larger than the two residential events.”


  4. Steve Barry says:

    Here’s the reset chart if you don’t find it in that website


  5. km4 says:

    ‘reality check’ damage report

    US debt will be over $20Trillion in less than 10 yrs
    Some new entries like fiat currency – look at money creation by Fed and that $589Trillion currency and credit derivatives…..now that’s F I A T !

  6. Winston Munn says:

    An Asian recovery decoupled from U.S. and European demand? Doubtful. In the meantime, the U.S. continues on its merry way to becoming….


  7. rww says:

    The “new orders” data is pretty impressive.

    But it could be a case of industry falling for the hype, preparing for an uptick in demand that doesn’t materialize.

  8. david says:

    Isn’t it reasonable to assume that manufacturing dipped SO low, that it had to increase just to fill in some of the backlog from the huge dip, even without any new demand coming into the stream?

    Correct me if I’m wrong.

  9. franklin411 says:

    The US and the big Asian countries relied on Keynesianism, and their economies are in recovery. European policy was set by paranoid Germans, who waged war on growth to fight an inflation-bogeyman that didn’t even exist.

  10. Marcus Aurelius says:

    Steve Barry:

    The “subprime” crisis is a misnomer and unfairly places blame on those coming in at the boom of the housing market for problems created by a cast of entrenched money interests. Already, prime mortgages have defaulted in record numbers, and the resets (Option-ARM and Alt-A) the Cyclepro article you cite are still hanging over our heads. CRE is also set for major collapse. The banks are fine.

    We never had a subprime crisis. We had systemic criminality in our banking, ratings, insurance, investment and financial industries (as the banks are at the root of it all, and as they are the largest beneficiaries of the crimes committed, I’ll put it all on them). We had a silent coup.

  11. wunsacon says:


    Hope you saw:

    It seems to me that the shadow inventory and delay-in-recognizing-losses will continue through Q1.

    Also, just to play devil’s advocate…

    What if the Fed keeps buying Treasuries and counterfeit assets in return for real cash — for “as long as it takes” to establish full employment again? Yeah, they say they’re going to wind down those purchases. But, that’s because they haven’t acknowledged the reality according to Steve Barry. When they’re faced with a second wave of foreclosure, won’t these same lobbyists and authorities respond with another dose of the same policies? And each time the Fed gives away money, that money has to go somewhere.

    As for the deficit it creates, people and business and governments have been talking about it for decades. But, they don’t “care” enough to do anything about it. They have to be *forced* to act. In the case of the US, our only real constraint to printing is the price of oil. Everything else we can start manufacturing again. Even oil has a replacement, if we would move ahead with the Pickens Plan.

  12. Bruce in Tn says:

    We have been boosted from the ground onto the roof by the government’s ladder. We have come up a rung or two since March. Wonder if our benevolent benefactor has enough sense to manage this. The fat girl says that FDR was too quick in 1937 and this “caused” the resulting weakness from 1937-1941….

    I guess we’ll see.

  13. mknowles says:

    There are 1,000,000,000+ who say the global recession is not over by a long shot. I’m tired of reading reports that are so narrow and exclude millions and millions of people. Maybe the individuals at GOLDMAN SACKS-USA can give the $23B total bonus or the $700,000 bonus they each receive on average this year to people like these folks:
    Recession tips world’s hungry over the billion mark

    16 Oct 2009

    The number of people who go to bed hungry every night has reached 1 billion, according to a new report by the United Nations’ Food and Agriculture Organisation. Today because of the global recession and rise in the price of basic foods in poor countries means there are more hungry children, women and men than at any time since 1970. In just the past year, that total has risen by at least 100 million and is now equal to one in six of the Earth’s population.

    go here for the rest of the post:

  14. VennData says:

    The global equity markets survived quite will without the marginal worker for generations.

    Globalization simply means there are, sadly, a few more of those globally marginal workers in the US (and, of course, a bunch of non-productive ex-real estate “professionals.”) But it’s the high-income discretionary spenders who dominate the consumption side of GDP and it always has been.

    Looking for a few hundred thousand people to move from unemployment (transfer payments) to employment (low wage) isn’t going to mean a hill of beans for worldwide corporate profits. The same goes for residential real estate prices (they’re down to flat) yet profits, production, spending etc… are rising.

    So stop thinking the “trailers” you’re seeing are anything other that a mis-characterize the ugly movie ahead. The first-tier central bank’s coordinated interest rate hikes are coming to a theater near you.

  15. bsneath says:

    The recovery will eventually come and it must come from the developing markets. We are broke. (That is with the exception of those Goldman Sachs employees who are buying the imported luxury goods.)

  16. Ponchovilla says:

    For some strange reason most people who look at their pay stub will not agree with THE GOOD NEWS. I’ll even go out on a limb and bet US TREASURY receipts and IRS collections next April will be MARGINALLY DISAPPOINTING.

  17. Daffyorbugs says:

    If mortgages reset at 5% or so, doesn’t that negate most of the damage? I can see that if rates were 7 or 8
    percent it would be a calamity, but that isn’t the case.

  18. thetanman says:

    The unsustainable imbalances are still there and will manifest themselves in many different markets in the years to come. Right now its in the currency markets as Brazil is balking at using taxpayer money to stop the slide of the dollar against the real. Their only other choice is to cut interest rates in the face of a boom. Either our economy booms or there is going to be some very hard choices made by Australia, Canada (countries with unwieldy housing bubbles), and booming countries like Brazil. Everyone knows that the US will do what its always done, all that’s left is to see the World’s reaction. Forget about a crash as we’ve already been turned upside down and our pockets cleaned out. It’ll crash it again, but no time soon.

  19. constantnormal says:

    Looking at the set of countries that have “emerged from recession” — Taiwan, China, India, Japan, S.Korea, France, … and the US — I notice that a significant fraction of that set are nations to which we have outsourced significant amounts of either manufacturing or labor over the past 30 years.

    How much of the US “improvement” is due to profits from economic activities occurring in those nations, which can be viewed as “empty calories”, in that they neither build investment nor strengthen this nation?

    Or does the D in GDP exclude those profits by definition?

    Also, if we do experience some backsliding in 1H2010 due to the stimulus being either inadequate or less-than-optimally applied — for instance, looking at how India has backslid the past 4-5 months, if we were to experience a similar phenomenon, might we not slide into the infamous W? After all, its not like we are well above the 50 score, either in magnitude or duration (and I have no clue what the margin for error is here, but I can easily see if being larger than the amount we are up by).

    I think the single item that continued recovery (such as it is, with the consumer retrenching and the financial infrastructure under continued assault from foreclosures and unemployment a continuing and growing problem) depends on, is the pushing down of the US dollar to make our domestic products more competitive. I see this as a form of protectionism, and doubtless foreign nations see it this way as well. In addition to being increasingly reluctant to lend significant amounts of money to the Treasury, I expect the drum-beat of pressure to move away from the US dollar as a medium of international trade will intensify, moving us further and further into unstable waters.

    The odds of an unpleasant surprise are increasing. Faster than the odds of recovery are increasing I cannot say, as the magic 8-ball keeps telling me “Don’t Count On It”.

  20. dss says:

    BR says:

    Regular readers know my aversion for asking Humans questions, and then drawing big conclusions. We tend to read too much into the answers, which history has shown to be unreliable.
    Not only are humans unreliable, history is unreliable as well. And everything is hidden by the fact that government statistics and surveys only tell the story months, quarters or years after the fact.

    If economic theory and statistics were reliable, we would all be sitting pretty. The system needs many to be fooled so that the few can profit.

  21. dss says:


    None of that political correctness here! We don’t want to hear about the world’s hungry people. It is such a downer. This is an economic blog, not some diary at the Daily Kos!


    Sadly, few care about the plight of other people. Thanks for the update and observation.

  22. Thor says:

    Not sure I agree with the “emerging markets are leading the way” statement.

    I’m amused that a group of smart people look at these graphs, read this blog entry, and swallow the data coming out of China as factual. You should all be smarter that that! ;-) As an example . . . who here knows how China calculates it’s unemployment numbers?

  23. wunsacon says:

    There will be no end to hunger in the world so long as major religious groups prioritize quantity over quality via policies against condoms, abortion, the pill, etc. No “economic system” can achieve what these belief systems work to undermine.

  24. DL says:

    franklin411 @ 10:56

    Even Keynes would question the wisdom of a national debt level that is approaching parity with GDP.

  25. scharfy says:

    This recession will be over when the bulk of our population is involved in productive labor. Try as they might, the powers that be will not be able to lead us back to a debt fueled consumption based economy. Unfortunatley, the US is no longer the low tax, business friendly nook of the world that it was 50 or even 20 years ago. So, while entitlement obligations, war costs, bailouts and deficits on the rise, actual labor friendly economic reform has become an impossibilty. Our government has checkmated our people, I mean they have needs, man!!!! Real manufacturing jobs will just not enter the marketplace under current conditions, would you open a factory in the US?

    Currently, the media seems to be using JPM, Citi, and Goldman earnings as a proxy Leading Economic Indicator.

    After that, the S&P 500.

    So hold your breath and hope for good financial earnings and high stock prices.

    Slowly, but inexorably, the emerging markets will be less affordable for Americans as the dollars value recedes.

    We will actually have to trade them “Good ans Services” for their products, not dollar denominated debt.

    Sad thing is, all the pieces are here. We have a large, educated(relatively) populus, plenty of natural resources, and powerful military. Those geniuses in DC just have to let the ponzi game die its natural death, and not enlave us to it.

  26. Goldilocksisableachblond says:


    “But it’s the high-income discretionary spenders who dominate the consumption side of GDP and it always has been. ”


    The top 10% of earners capture 50% of all income , but account for less than 50% of consumption. Their consumption will decline less in downturns , of course , but the way to increase demand going forward is to see that the bottom 90% , those with a ” higher marginal propensity to consume” , have something to consume with.

    Duke/ CFO magazine does a quarterly survey of CFOs and , since mid-2006 , their number one concern has been ” Consumer Demand”. That’s not because the top 10% were looking shaky.

  27. Mannwich says:

    @VD: If the unemployed #’s reach high enough into the middle to upper-middle class like I think the might, you may change your tune on this one. Just make sure you’re little enclave is heavily fortified with the newest and latest security though, and YOU (and your pals) personally should be OK, right? No big deal.

  28. Mannwich says:

    VD said: “But it’s the high-income discretionary spenders who dominate the consumption side of GDP and it always has been. ”

    This is the kind of clap trap we get when the useless limousine liberals are running the show. They’re almost worse than those idiots on the Right who brought us to this point.

  29. impermanence says:

    Rikky writes:

    “improving is an overused term during this crisis. if last year i made $100 million and this year i made $10 million then next year i made $14 million that’s a 14% “improvement”.”

    Actually, it’s a 40% improvement which further strengthens your point that statistics, although interesting, are generally used to deceive. Who cares whether we are in a recession of not? I am in health care and I have been in a “recession” for the entire 30 years I have been in practice, the profits being shifted to the corporate players.

    For 90% of the American people, it has sucked over the past two generations and will continue to suck until the economy is taken back from the parasites in the FIRE economy who produce no wealth what-so-ever.

  30. Mannwich says:

    This is a “lagging indicator” for those newly minted unemployed, no? Let the “mini economic boom” roll onward.


  31. Marcus Aurelius says:

    impermanence Says:

    “I am in health care and I have been in a “recession” for the entire 30 years I have been in practice, the profits being shifted to the corporate players.”

    Bingo! There’s your escalating “health care” costs. Coroprations have industrialized the system — using the societal necessity for basic healthcare as a license for amassing windfall profits. The practitioners are mere employees. Like Bill Maher once said (I paraphrase), “Only in America do we see breast cancer as an opportunity to make a buck.”

  32. Winston Munn says:

    @Marcu Aurelius and Mannwich,

    “Like Bill Maher once said (I paraphrase), ‘Only in America do we see breast cancer as an opportunity to make a buck.’”

    “This is a ‘lagging indicator’ for those newly minted unemployed, no?”

    I never thought about it before, but I guess death is a lagging indicator.

  33. HarryWanger says:

    Barry: Foolish to even try to suggest to this crowd that the economy is improving. Doesn’t matter if you throw every stat and fact at the book at them. They’re the Failure Caucus – never happy unless the economy is falling to pieces. They’re fools who have let the greatest money making opportunity we will ever see in our lifetimes slip through their doomy finger.

  34. JusTryinTaMakeIt says:

    It’s hard to see how the recession is over when federal tax receipts in September were 20% below 2008:
    http://www.mybudget360.com/government-tax-receipts-down-20-percent-year-over-year-wall-street-banks-earning-billions-the-unsustainable-economic-course/ And state receipts seem to be following a similar path:
    In the second quarter national sales tax receipts were 9.5% below 2008. That would indicate to me that consumption was 9.5% below last year! Maybe those upward slopes in the graphs you presented reflect “less bad” conditions. They clearly don’t represent improvements over prior peaks!

  35. ToNYC says:

    A list of the $85 Billion CDS trade tickets/ swap agreements that AIG was about to fail on and Hank Paulson strong-armed the US Treasury and Congress to pay 100 cents on the dollar to Goldman Sachs, the successful in settlement entity. I’d like to see that. The US Treasury paid for it by creating the cash out of the FED Reserve organization of Member Banks of which no People are members. The Peoples money was diluted by this fiat currency creation and dilution as if it could be traded for real effort, food, fruit, services by a free People. What product did we buy? Can I get a refund?

  36. Blurtman says:

    If GDP is increasing, the recession is ending.

    Two issues:

    1.) GDP numbers have been bullshit in the recent past, having included bogus FIRE revenues. Has anyone gone back and corrected the last few year’s GDP numbers by subtracting out bogus revenue generated by the selling of bogus FIRE products, i.e. inflated real estate, falsely rated MBS, CDO, etc?

    2.) There may be a disconnect between the reports of the end of the recession and the continued deterioration of the standard of living of the average citizen. If GDP goes up and so does unemployment, or if GDP goes up, and the standard of living continues to decrease, so what?