The recession is turning into a repression. Analysts and economists have gone into total denial.
First, we have the Bank of America Merrill Lynch (what a mouthful) declaring that the recession is over. It's been joined by commentator Daniel Gross who has said we are witnessing a "jobless recovery". And the Dow rallied too.
This is dangerous stuff because it fools people into thinking the worst is over. It's not. There can be no recovery when people are losing jobs. Talk of a "jobless recovery" is garbage. Rising unemployment has seen foreclosures soar 15% in the first six months of this year, affecting 1.5 million homes.
This recession won't end until people start spending again, and they won't start doing that until they feel secure at work and their mortgages are not under water.
As economist Nouriel Roubini reminds us, even if the economy stops contracting it will not necessarily signify the end of the recession. More than 3.4 million jobs have been lost in 2009, mroe than double the number in the recession of the early 90s. "There are also signs that a double-dip recession could materialize toward the second half of next year, or in 2011,'' Roubini writes. "If oil prices rise too much, too fast and too soon, that's going to have a negative effect in terms of trade and real disposable income in oil-importing countries. Also, concerns about unsustainable budget deficits are high and are pushing long-term interest rates higher … in conclusion, the outlook for the U.S. economy remains very weak. The recent rally in global equities, commodities and credit may soon fizzle out as worse-than-expected earnings and financial news take their toll on this rally, which has gotten ahead of improvements in actual macroeconomic data."
Maybe economic history in 10 years time will suggest that mid-2009 marked the end of the recession. But so far, there is no evidence to back up the cheer leaders.
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