Technically, the recession is over, but to be realistic we need a better gauge
So officially it’s over.
Technically, the recession that began in December 2007 ended in June 2009, according to the National Bureau of Economic Research. It was the longest downturn since World War II. We need another yardstick to measure how bad off we are, though.
The recession may be declared over, but the hole we’ve dug is too deep to be measured only by the macroeconomic factors the bureau considers.
Hard times are far from over for the millions still out of work, and for the people who have found jobs at much lower wages. The slump is not over for those who thought they could retire soon. Their investments have dropped so much that they have to work longer or live on less in retirement.
It’s definitely not over for the millions of people living below the poverty line. The poverty rate in 2009 was the highest since 1994. There were 43.6 million people in poverty last year, up from 39.8 million in 2008, the Census Bureau reported recently. Last year, one in seven Americans lived in poverty. For a family of four, the poverty level was $22,050.
It’s not over for the millions still without health insurance. The number of people lacking coverage rose from 46.3 million in 2008 to 50.7 million in 2009.
The NBER defines a recession as a period of falling economic activity. The measured activity includes real income (wages of an individual or group adjusted for the effect of inflation on purchasing power), employment, industrial production, wholesale-retail sales, and real gross domestic product, which is an inflation-adjusted measure that reflects the value of all goods and services produced by an economy.
The question should also be: Are we accurately portraying the health of the economy and how individuals and families feel about their finances?
I put that question to Wilhelmina A. Leigh, an economist and senior research associate for the Joint Center for Political and Economic Studies. Like so many others, when Leigh heard the news that the recession ended, she scoffed.
“I think perhaps what is needed is to be very cynical about the whole notion of when a recession starts and when it ends,’’ Leigh said.
It would be useful to look not just at macroeconomic indicators, but at how people are affected, she added. An accurate measure of prosperity should factor in poverty levels. It should consider not just official unemployment figures but the many people not counted in Labor Department data. The official figures don’t include the underemployed and those who have stopped looking for work.
The new prosperity gauge should include those who aren’t earning a living wage. Someone who works a 40-hour week and earns a living wage would be able to afford housing, food, health care, child care, transportation, and other necessities, Leigh said. Sadly, that’s not the reality for a lot of people.
Michelle Singletary is a columnist for The Washington Post.