IS THE RECESSION REALLY OVER?

2007-08 saw the onset of what has gone down in the archives of economic history as the longest financial crisis since World War II. Recession had struck the U.S. World economies (including those of the U.K., Japan, China, India and Germany) were floundering owing to reduced liquidity, sector price inflation in food and energy and the U.S. downturn. Production, employment, investment spending, household incomes, business profits, stock markets all plunged while bankruptcies and unemployment rates were at record highs. Governments responded – money supply was increased and so was government spending, taxation was slashed, banks were bailed out.

2009-10 saw proclamations the world over that the worst had passed and recession was at an end. Several luminaries and most commoners begged to differ. When the NBER (the official arbiter of recessions in the U.S.) declared the recession “officially over”, scores of Americans who were either unemployed or underemployed weren’t celebrating. Bollywood-besotted Indians were told that the recession was over when film-star remuneration packages, which had dwindled during the recession, soared through the roof. The Indian commoner, now besotted with working harder than ever just to stay afloat, wasn’t paying attention. “Russia has overcome recession” said Russian PM Vladimir Putin but when he added in the same breath that “This does not mean that the economic crisis in the country is over”, I doubt that even the Russians were buying!  

The critics argued that these were just attempts at infusing false hopes in floundering economies and to substantiate this they cited unemployment rates, retail sales, the possibility of a double dip and political agenda, among other things.

So, is the recession really over? With both ‘yes’ and ‘no’ answers to this question and no standard measure for an objective analysis, the answer depends really on who you ask. While most economists, policy makers, industrialists and leaders have declared it over (for reasons ranging from academics to politics), the common man can’t help but ask – Have they spoken too soon?

The debate stems from the fact that while academicians consider a recession over when the economy gets back on the recovery path, the common man contends it isn't over until the damage is repaired.

So, while over for all academic (and perhaps, political) purposes, recession stretches on for the common man…