U.S. set to declare recession over, but job pain will persist

It’s about to become official: The recession is over — but not the pain.

The government will release figures
this week expected to show that the economy has awakened from its deepest slump since the 1930s and is in the early stages
of a recovery. But the following week, the government will issue another set of figures expected to show unemployment continuing
to rise toward and possibly above a clearly recessionary 10 percent.

How can both be possible?

The government
releases third-quarter Gross Domestic Product figures on Thursday. Many forecasters say they will show GDP growing at an annual
rate of about 3 percent, validating a widely held belief among economists that the recession ended in June or July.

But try telling that to the more than 15 million still unemployed, the small businesses and individuals who can’t get loans
and the people whose homes are worth less than their mortgages.

Assertions by government and private economists
that the recession is over — issued amid graphic examples of continuing wide distress — are raising fresh questions
about economic scorekeeping.

The national recession may be technically over, but the state of the economy remains
in the eyes of the beholder.

Or, as Ronald Reagan liked to say, a recession is when your neighbor loses his or
her job. Depression is when you lose yours.

A survey of economic forecasters prepared by Blue Chip Economic Indicators,
a research organization, predicted GDP growth to remain positive in each quarter through the end of 2010. In a survey by the
National Association of Business Economics, 34 of 43 economists polled said the recession is over.

"From a
technical perspective, the recession is very likely over," said Federal Reserve Chairman Ben Bernanke.

"A
recession that showed no signs of ending last January appears to be firmly entering the recovery phase," said Christina
Romer, the chair of the White House Council of Economic Advisers.

But nobody is sugar coating the statistics, especially
in the administration, which agrees with private surveys suggesting that unemployment will hover near 10 percent through most
of next year.

"Even when you’ve turned the corner, you have so much work to do," Romer told Congress’
Joint Economics Committee.

And while she credited much of the turnabout to government stimulus measures and moves
by the Fed, she said "by mid-2010, fiscal stimulus will be contributing little to further growth."

The
economy has lost 7.2 million jobs since the recession began in December 2007, 3.4 million of them since President Barack Obama
took office in January.

James K. Galbraith, an economist at the University of Texas at Austin, suggests too much
attention is given to when recessions technically begin and not enough to other measures of the economy.

"It’s
just a word. A recession technically lasts during negative quarters. But that doesn’t mean you’re back to prosperity once
you have positive growth. You’re back to prosperity when the unemployment rate is back around 4 percent," Galbraith said.
And that, he said, could take years.

A recession is popularly defined as two or more consecutive quarters of negative
economic growth, or declining output.

But a more refined determination is made by the National Bureau of Economic
Research, a private group of leading economists charged with dating the start and end of economic downturns. It not only looks
at GDP but at employment levels, real personal income, industrial production and wholesale and retail sales.

It
put the start date at December 2007 and has not yet called an end.

There have been 11 recessions since World War
II. In the two most recent ones, job growth lagged long after the recessions were deemed over. In the most recent two —
July 1990-March 1991 and March-November 2001 — the unemployment rate did not fall to prerecession levels for several
years.

After the eight-month 2001 recession, the unemployment rate went from a prerecession 4 percent in 2000 to
4.8 percent in 2001. Then it kept climbing even higher — to 5.8 percent in 2002 to 6 percent in 2003. It didn’t return
to under 5 percent until 2006, when it fell to 4.6 percent.

While there are clear signs of recovery, it is uneven.

Stocks have surged about 50 percent since their March lows. And a year after Washington rescued the financial industry,
some large banks and Wall Street firms have roared back to profitability.

But smaller banks and other businesses
are struggling, and many have failed or are failing.

That disconnect sparked anger among the public and led to
sweeping government action last week to limit executive compensation at financial firms that accepted federal bailout money.

"While credit may be more available for large businesses, too many small business owners are still struggling
to get the credit they need," Obama said in his weekly radio and Internet address. "These are the very taxpayers
who stood by America’s banks in a crisis — and now it’s time for our banks to stand by creditworthy small businesses,
and make the loans they need to open their doors, grow their operations and create new jobs."

There have been
modest improvements in manufacturing and other parts of the nonfinancial business sector, yet lingering signs of weakness
in commercial real estate and retail spending.

Economists suggest some of the expected increase in economic growth
is a bounce off the bottom. They attribute it to government stimulus spending, including the now-expired Cash for Clunkers
program; accommodative Fed monetary policies and widespread cost-cutting by companies.

Many companies let inventories
run down so much that when they ran out, orders picked up. Home resales ticked up as buyers scrambled to complete their purchases
before a tax credit for first-time owners expires. And U.S. exporters have benefited from a relentless decline of the dollar
that has made U.S. goods cheaper and more competitive overseas.

But none of this adds up to a sustainable upswing.

"Absent robust job growth, it is not a true economic recovery," said White House economic adviser Jared
Bernstein.