Hooray! The Recession is Over! Hooray!

According to several recent news reports, the recession the American economy has been wallowing in for the past several quarters is over. Estimates of the annual growth rate for the US economy during the third quarter of 2009 are about 3.5 percent. Credit is being given to various government stimulus measures, such as Cash for Clunkers, tax credits for home buyers, and Audacious HopeTM.

Hooray.


In other news, during a recent Church meeting I attended, we were informed that the past month has been the single biggest drain on fast offering donations on record for the Stake.1 Additionally, every Ward Council meeting I’ve been in for the past several months has had unemployment or other financial struggles as a major agenda item. So, a couple of questions.

1. Even if the recession is, statistically speaking, over, how are things looking for you or in your ward?
2. What form of counter-cyclical policies has your ward (or neighborhood!) been implementing during the recession? What successes have you seen? What could be done better?

The time is now yours to share your feelings on this subject.






1. I don’t really know whether it was “for all time” or not. The idea conveyed to us was just that it was a distribution of historic proportion for our Stake.

________________________

Hooray! The Recession is Over! Hooray!

Comments

  1. its over? I had not noticed.

  2. As you rightly point out (though I am not economist), the unemployment rate =/= economy. This should be a tough market for workers for some time yet.

  3. J. Nelson-Seawright says:

    Ends of recessions are rarely noticed immediately by the kind of folks who don’t go to Davos, as unemployment and wages tend to lag if they recover at all. The effects on wards and stakes should continue to be felt for a while even if there isn’t a “double-dip” recession (a stupid phrase to paper over the fact that recessions sometimes have brief up-ticks in the middle).

  4. What factors go into calculating the AGR again? I wonder how much of that 3.5% could be finanacial gains made due to lowering costs (laying people off).

    Since Cash for Clunkers is over, haven’t we seen a huge drop, since everyone who could buy did buy and now those who couldn’t buy are even less likely to buy than before?

  5. J. & JNS,
    Right. Beginnings and ends of recessions are reliant only on collected data, and clearly need not reflect any visible change. Thus, at this point, my hope in writing posting this is that, since we’ve all had most of a year in the dumps, our wards, EQs, RSs, etc…have learned a thing or two about administering to the needs of people who found themselves in the midst of unexpected financial duress.

  6. Our stake continues to see high demand for fast offering funds and orders for the bishop’s storehouse. Unemployment in our area still is high (between 9-10%) coupled with a high cost of living, making it difficult for the unemployed and underemployed. I’ve more than once heard talk about a “jobless recovery”.

    On a positive personal note, my 21 year old son, after being out of work for several months, just accepted a new job today, which will meet his immediate needs, but is not one to build on for the future (game tester). It takes him off my personal dole, though, which is good.

  7. As to counter-cyclical activities, what I have seen is a regional effort with a multi-stake networking event or two, and some efforts to revitalize an email list of job opportunities and helps on job hunting skills. Most of the folks that I have talked to about LDS employment, though, have said they have had little in the way of actual job listings this last year in the Puget Sound area. I’m attending a regional welfare meeting later this week, and should get some updated information.

  8. Matt W.,

    Good questions. Because the time frame for CFC was so narrow, the impact of it is certainly likely to be more of a spike than any kind of long-term improvement. However, data from that program, which are included in 3rd quarter estimate of 3.5% AGR, are incomplete and will be revised in late November–this was just a preliminary announcement, so it’s not very detailed as yet.

    As far as what goes into the computation of AGR, it’s just a simple (well, formulaically, anyway) calculation of the growth in real GDP. The recent statement from the BEA is probably the easiest explanation, so I’ll just quote it here:

    The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, private inventory investment, federal government spending, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.

    The upturn in real GDP in the third quarter primarily reflected upturns in PCE, in private inventory investment, in exports, and in residential fixed investment and a smaller decrease in nonresidential fixed investment that were partly offset by an upturn in imports, a downturn in state and local government spending, and a deceleration in federal government spending.

    Motor vehicle output added 1.66 percentage points to the third-quarter change in real GDP after adding 0.19 percentage point to the second-quarter change. Final sales of computers subtracted 0.11 percentage point from the third-quarter change in real GDP after subtracting 0.04 percentage point from the second-quarter change.

  9. No, it’s not over; just begun in my opinion: debt to income ratios; state budget crunches; zombie banks. No way in hell…

  10. Scott,

    With your disdain of Macroeconomics, I am shocked that you even mention things like recession and GDP growth in the post.

    On a more serious note: I would propose that the requirements of ending a recession be as stringent as the requirements of entering a recession. If it takes three consecutive quarters of negative GDP growth, it should take three consecutive quarters of positive GDP growth to end it.

  11. Tell it to CIT, the big bank which just filed for bankruptcy, and several other banks which were bailed out by the TARP and following it real soon now.
    Tell it to the State of California, which can neither pay its bills, nor quit spending more money than it takes in.

    Prosperity is just around the corner!

  12. Right, some people are giving Cash for Clunkers credit for bringing us out of recession and others are giving it credit for moving Q4 sales into Q3. We’ll only have to wait one quarter to find out who is correct on that.

  13. Actually, Fletcher, I would say that my disdain for Macroeconomics comes out quite clearly in the post, doesn’t it? I.e., the post is centered on my observation that Macroeconomic data are only marginally related to reality.

  14. So…anyone have any responses to the questions in the OP?

    /gentle nudging.

  15. Cynthia L. says:

    We have a missionary couple assigned to employment issues. Unfortunately there is only so much they can do when there are just no jobs.

    I’ve heard similar things about our ward budget.

  16. My ward and stake have been emphasizing the need for generous fast offerings. However, they’ve implemented a system for reminding us of this need without constantly bringing it up. It’s simple: when all three members of the bishopric or stake presidency are wearing red ties, it means that the ward or stake is distributing more money in welfare than it’s taking in in fast offerings. As our stake president said, “Remember, one red tie is a fashion statement. Three is a message.”

  17. Like Fletcher said, getting excited about 1 ‘good’ quarter is ridiculous, especially if the growth was in consumer spending (likely credit card debt), housing (mortgage debt), and federal government spending. Note that 1.66 of those 3.5 percentage points (47%!) were “[m]otor vehicle output”, which IS the Cash 4 Clunkers program. That’s not going to be there next quarter.

    Note also that this is the Advance GDP estimate, and the variance between Advance and Final GDP numbers for the same quarter has been as large as 3.2 percent recently.

    If the recession is over, why is there talk about a second stimulus (Obama’s was the _second_ stimulus; Bush signed the first one).

    Things looked pretty rosy in 1930 also. We’re on the verge of the Second Great Depression.

  18. Molly Bennion says:

    Inner Seattle definitely needs more fast offerings. This recession is different in its hit to the educated and highly skilled, many of whom carry large financial obligations. Some of their jobs are gone for years or just gone. For example, last week I met with 4 families I’ve known since grad school. 3 of the 5 of us have unemployed children who had been well-established in their careers. They were in the financial and commercial construction industries and their prospects look bleak.
    Our stake RS meeting Sat is “Make it do or do Without.” Provident living would never have been the theme last year.

  19. Scott (14), here ya go.

    I just gave a blessing the other day to a ward member who is being considered for a position after being laid off several months ago. We have an awesome ward employment specialist, a stake Linked-In group with weekly activity, and we’ve been a part of the same multi-stake networking events kevinf mentioned. A significant fraction of my ward works for Boeing, though as far as I know none of them are expected to be part of the 500 layoffs recently announced.

    At high priest quorum meeting a couple of weeks ago, the stake president gave some amazing figures. YTD fast offering donations (after a call for more at the spring Stake Conference) are at about $200,000. During the same period, the bishops in our stake have given support around $210,000. He encouraged us to continue to be generous, as he would ideally like to take care of our own and send a large surplus check to Salt Lake.

    On another front, we are actively preparing to take care of our own families, our own ward, and possibly host families from nearby stakes who will be forced to evacuate their homes if the Army Corps of Engineers gives the word that excess water will be released from the Howard Hanson Dam, causing flooding of the Green River plain. My stake is out of the flood plain, but loss of power and sewer and storm drain issues may occur.

  20. Sheesh, Ben (17)! Talk about gloom and doom!

    Sure, it’s just a quarter, and it’s heavily influenced by government policies, but that doesn’t mean we need to change the economic definition of a recession, according to which the current one has ended–statistically speaking (Every one of the reports I linked to makes it clear that the problems are far from over–that’s why I went with the double-hooray in my title–my attempt at irony, I guess.) The whole purpose of the post is exactly what you’re saying–that economic definitions notwithstanding, the problem is ongoing for many, many people.

  21. Fletcher & Ben Pratt,

    Another idea just occurred to me–I am very happy to have a definition that allows for the recession to be “over” as soon as possible, and given my knowledge of both your preferences for less intervention in the economy than more, you should, too. The longer we are in a “recession,” the longer Congress will keep trying to do things about it by enacting pointless, temporary fiscal policies.

  22. I think this past year has taken us more quickly to the divide between the haves and have-nots. Who is emerging from the recession? Ford is making a profit again. Is that benefitting its employees? I bet the VC paying DH’s salary is making money off his investments again, but DH is making less than he was 3 years ago. If the “economy” is doing well but most of the workers are not, is that a reflection of well-being in the U.S.? I don’t see things getting better for those in the trenches for a long while.

  23. Kevinf (7.), I’d be interested to hear what info you pick up at the regional welfare meeting. Make sure and leave a comment back here, or send me an email.

  24. The end of a recession means nothing more than things are turning around economically speaking, If you are deep in the woods, it takes a while to get out.

    Contrast this to the colloquial idea that the end of a recession is when things are back to normal. That is not what economists mean at all. A recession is when your grades are going down, a recovery is when they start going up again.

  25. Mark D., over on the other side of the question is the point that unemployment and poverty can easily hit their highest levels after a recession ends. A recovery isn’t when the grades start going up again; it’s when one grade starts going up, regardless of what happens to the others.

  26. This is silly. Recessions are gauged by GDP growth per quarter, and not by the effects on unemployment and such. Of course the recession looks like it is over, but how quickly that translates into improving unemployment figures depends on the investment in new businesses by both private and government investors.

    I hope the Senate finally passes the unemployment extension support and that Obama considers another stimulus package (as is reported) which should continue to help support those out of a job (and not have them become a drain on the economy).

    In our stake, here in Manhattan, the stake has done a phenomenal job at helping its members find and keep jobs. We have not had a serious brain drain, though some have left for greener pastures.

  27. Matt,

    #4,

    Since Cash for Clunkers is over, haven’t we seen a huge drop, since everyone who could buy did buy and now those who couldn’t buy are even less likely to buy than before?

    Actually Ford just reported a surprising profit in its last quarter which was not related to the summer’s Cash for Clunkers program. But Ford has been ahead of the game, compared to GM and Chrysler, and it was expected they would come out of this recession in a fairly good shape. GM and Chrysler deserved to fall as they did; they lacked the vision and organizational culture to change as they should have. (Remember, GM killed the electric car and went with the hummer, when they should have had the foresight to see that the electric car was the future, and NOT the hummer).

  28. Daniel (26),

    This is exactly why Scott’s post has relevance. Even though one can recognize that GDP is the only measure of an Economy’s performance, it is still a crappy measure. At it’s most basic definition, GDP is the sum of consumer spending, government “spending”, investment, and trade balance. The interdependency of these components makes fiscal stimulus so unpredictable. Also, the government component has broadened its scope to include activities that really do not have multiplicative effects, like most Keynesians hope.

    This rebound that we are seeing is just a small staying of further plummeting of the economy. Have all the audacious hope for the change that you want, but until the government stops supporting policies that inhibit investment and capital growth, all recovery projects will only have nominal effects, not real ones.

  29. Dick Cheney says:

    I agree with Daniel.

  30. alextvalencic says:

    Our stake has an awesome employment specialist who has been working on developing an information bank of short- and long-term employment opportunities. This has probably been the most noticeable effort by the church to help people through times of unemployment.

    Our Stake President recently counseled our ward’s welfare committee to remember that our purpose is to be proactive, not reactive. To this end, our ward has been working on putting together a disaster response plan, and encouraging members to assess their resources.

  31. My company is in advertising, and in my fifteen year experience we usually lead upturns and downturns in the economy. We started having bad months with slow sales about two months before people were really grumbling about the economy last year, and we stared picking up again last month. So if it holds true to the last 15 years I’ve been here, things are starting to get better.

    The main difference I’ve seen in my ward is a weekly call in EQ to please tell the employment specialist about any job openings you’ve heard about.

  32. Alextvalenic (30.),

    Yeah, I think that’s one of the biggest things I’ve noticed in my ward–a shift from a mentality of reactive efforts to proactive efforts. The discussions of job openings, networking meetings, and other related activities have become a regular part of almost all meetings, rather than an ad hoc event.

    I also appreciate what Molly said in (18.) about the way the recession has hit many people who least expect to have these kinds of problems–those with lots of education and work experience. This is particularly difficult for those in that position, because their previously higher (relatively speaking) salaries means that finding lower-paying, temporary jobs are extremely unlikely to meet fixed liabilities such as home mortgage payments that were only attainable because of that higher salary.

    My ward has also seen a handful of success stories, as networking within the ward has led to a few job hires that have been huge blessings for those families.

  33. Scott (20),

    Sorry. I really did catch the irony, but my first response didn’t reflect that very well. #17 is admittedly doom and gloom, but it’s also a) some facts to counter the meaningless pronouncements by the same ‘experts’ that didn’t even see the recession coming, and b) a public prediction that I can point back to if is truly and unfortunately realized.

    What I love is that people, wards, and stakes are taking better care of their own. That’s so awesome.

  34. The main difference I’ve seen in my ward is a weekly call in EQ to please tell the employment specialist about any job openings you’ve heard about.

    As a former ward/stake employment specialist, I can say that this is one of the most ineffective methods I’ve heard of.

    I’d challenge the EQP to see if he can name the people in his quorum who are looking for work and the type of job they are seeking. Only then is the fishing expedition worthwhile…

  35. queuno,

    YMMV. My experience at the ward council level–which includes the EQP–has been that the WC is quite aware of the specifics of different members of the ward. That said, I think you (in passing) raise a more valid point–that getting people to inform ward leadership that they are unemployed and/or in need of help can be problematic. In other words, I believe that my EQP knows the job-goals of most folks who have identified themselves as seeking a job quite well, but I highly doubt that he is aware of everyone who is actually seeking (or _should be_) a new job.

  36. Ben,

    It sounds like your ward is right in the middle of things–both on the negative, lots-of-potential-problems end, as well as the good anxiously-engaged-in-working-for-solutions end. I am curious about the flood area you mentioned above, as I haven’t heard about that before.

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