If there's anyone who should know when the recession is ending, it would be Fed Chairman Ben Bernanke. So why, when he declared on Tuesday that the worst is "very likely over," are many commentators giving him a skeptical eye?
The short answer is debt, unemployment, and persistent skepticism of the Fed chief. How so? With the poverty rate at its highest in decades, many argue that for ordinary people the recession is far from over, though technical signs are improving and the market surged on Bernanke's optimism. Other economists worry that the stimulus, bailouts, and other massive expenditures will hamper the economy in the long run. And finally, many still haven't forgotten--or forgiven--Bernanke's failure to stop the sub-prime mortgage crisis despite warning signs.
- U.S. Still Worse Off Than Globe, says Terry Woo at Minyanville. "Whether or not the US recession is over, it doesn't really matter. What matters is that the US is still the last of the major economies in the financial funk."
- Never Trust Economists' Forecasts, warns Barry Ritholtz at the Big Picture. We should have learned our lesson when Bernanke said the sub-prime explosion was contained. "I don't wish to single out Mr. Bernanke; After all, he is an economist, and if you were paying attention, you will note that the entire profession missed the oncoming recession, credit crisis and market collapse. You may also find it helpful to ignore what the profession that cannot forecast yesterday thinks about tomorrow."
- No Hope for the Little Guy, writes Michelle Kraus at the Huffington Post. "For the Average Joe/Josephina the situation is pretty bleak. He/She sees that the TARP money bailed out the big Wall Street guys, but no one is bailing him/her out. The Wall Street executives took their bonuses and ran."
- Ignore Unemployment at Your Peril, says Ryan Avent at the Economist. "If the national narrative shifts to talking about a return to growth while parts of societies in countries around the world face persistent unemployment, there may be serious political ramifications. We're all of us ready to put the downturn behind us and move on."
- Slight Improvements Can Be Misleading, says CalculatedRisk. The writer cites many previous recessions where brief sunny periods were followed by repeated declines. "Although I think the official recession has probably ended, it is worth remembering that one or two quarters of GDP growth doesn't necessarily mean the recession is over." For many workers, 2010 will "probably feel like a depression."