Well, I think it really depends on who you ask. The recession has meant very different things to different (real) people.
But the Washington Post posed this question to me–and other economists–yesterday… not so much “real” people. (I actually think they should do a follow-up where they do ask the question to real people.)
Anyway, this is how I answered, looking through my economist-biased lens but still trying to think about real people:
DIANE LIM ROGERS
Chief economist of the Concord Coalition; blogger at EconomistMom.com
In a purely technical sense, the latest economic data do suggest that the “worst of the recession” is over. The economy is still shrinking, but not as fast, and most economists think we will bottom out soon. But using aggregate economic data as an indicator of economic “well being” is misleading because such figures are dollar-weighted, not person-weighted: a “rich” family with a $300,000 income is counted nearly 30 times more than a 30-hours-per-week minimum-wage family.
It’s those Americans who are assigned the lowest statistical weights who are most likely to be still without a job or otherwise under-employed. The labor market is always the last aggregate piece of the economy to recover, and this recovery is expected to be unusually slow. The irony is that the economy as a whole could be officially “recovering” within a couple months, yet the vast majority of American families will not see an improvement in their own economic well being for at least another year.
On a positive note, the economic data also suggest that when American families eventually land on higher ground, it won’t just be back to where they started, but to a different, more sustainable place in terms of their jobs and financial security.
I was limited to 200 words, so that “positive note” at the end is surely a bit cryptic. So here’s a bit of an elaboration of that point–why I’m optimistic that although this is a really tough recession, that our country has the opportunity to come out of this stronger than before:
The employment data show that the auto manufacturing sector has shed nearly 300,000 jobs since the start of the recession (in Dec. 2007), but that a large part of that is just a continuation of the permanent decline of the industry. The last peak in auto manufacturing employment was in February 2000, when there were 1.330 million autoworkers, and by the start of the current recession we had already lost 372,500 of those jobs. This is a permanent aggregate trend that might ultimately be a good thing, not just for efficiency in the U.S. economy as a whole (as we move toward producing other things we value more and are indeed better at producing) but for many of the currently under-employed autoworkers who will manage to move themselves into jobs in other (appropriately growing) industries as the economy recovers.
And the personal saving data show that people are actually capable of living within their means; it just took this crisis to get them to do it. Some people were forced to save more by creditors who took their credit lines away, but others chose to save more when they were scared smart by the bankruptcies, foreclosures and unemployment surrounding them. Since the start of this recession, the personal saving rate has moved from just 1 percent to the 5-6 percent range. And that’s a good thing for the longer term; it’s what we needed to do.
So I think the economic outlook could be pretty good for precisely those people who will have to slog through the longest and most difficult journeys. The hard journey forces them to think and plan more carefully for the future–to make some real changes in their lives–in ways that a shallow, mild recession would not. And I’m convinced that the fact that families have had to get their act together during this economic crisis will make them more appreciative of the similar challenges the federal government faces, and will make them more receptive to the need to get the fiscal house in order–even if it involves the tough choices of tax increases and spending restraint. This is what I see as the longer-term “silver lining” to this particularly painful recession. I feel there’s a tremendous opportunity to use the current economic crisis as a great teachable moment that can help steer us all (in aggregate and individually) onto a better path.