The recession's over. In fact, it ended way back in June of '09, according to the official announcement, which came out this morning.
This news raises at least two questions:
1. What's the definition of a recession?
2. If the recession ended more than a year ago, how come it still feels like the economy is a mess?
Here are the answers:
1. In the U.S., a recession is whatever a committee of about eight economists says it is.
According to those economists, a recession is "a significant decline in economic activity" that "spreads across the economy and can last from a few months to more than a year."
Lots people say it's a recession if real GDP falls for two quarters in a row, but the committee uses a more subjective set of measures that includes GDP, income and employment. This Q&A has more detail.
Because initial estimates of economic activity tend to be pretty rough, the committee typically waits a while, to get a clearer picture, before officially declaring the beginning or end of a recession. Most analysts have been saying for months now that the recession ended in the middle of last year.
The committee meets under the auspices of the National Bureau of Economic Research, a private, nonpartisan group. The members are listed at the bottom of today's announcement.
2. Recessions end before the economy returns to health.
We're in a recession when the economy is getting weaker for a prolonged period. So what the committee is saying today is that the economy stopped getting weaker in June of last year.
But there's a big difference between "stopped getting weaker" and "returned to health." Here's a key passage from today's statement:
In determining that a trough occurred in June 2009, the committee did not conclude that economic conditions since that month have been favorable or that the economy has returned to operating at normal capacity. ...
Economic activity is typically below normal in the early stages of an expansion, and it sometimes remains so well into the expansion.
In other words: The recession's over, but the economy's still in bad shape.