Recession Should be Over Soon

Our first reaction to the National Bureau of Economic Research making the official call that the United States is in a recession: Well, duh. Talk about stating the obvious.

The NBER said the U.S. recession began in March, some eight months ago. Since past recessions have, on average, lasted about 11 months, we’re probably already on the way out. At least we’re probably closer to the end than to the beginning. The recent rebound in the stock market and the encouraging start to the Christmas retail season appears to back that up.

Many economists foresee a recovery by July, which is pretty much what people who attended the UALR Economic Forecast Conference were told a few weeks ago. Some see a quicker end — by March.

Most think the recession will be mild. The NBER said a full-blown downturn might even have been avoided if not for the Sept. 11 terrorist attacks.

Economists, masters at hedging, say any future terrorist attack would put an unknown factor in the recovery. So a lot could happen to change the growing optimism.

President Bush said the government will do everything it can to “enhance recovery” and used the “official” announcement of a recession as occasion to prod Congress to quickly pass a $100 billion economic stimulus package before Christmas.

The NBER dittoed the president, saying, “Failure to act in the Senate risks prolonging a recession.”

The irony is that passing it could also mean problems. If Congress’ stimulus package starts to take effect just as the economy is gaining momentum, inflation becomes a risk. If the recession is over early next year, as widely expected, we’re a bit puzzled by the President’s rush. Whatever Congress passes probably won’t be felt until after the economy is already on the upswing.

Much of what’s going on in Congress is simply good ol’ politics — the Democrats are, typically, calling for more spending for low-income Americans, while Republicans are, typically, seeking tax relief.

A compromise economic stimulus bill should have some temporary tax cuts along with some temporary spending increases for the unemployed and should be put into effect only if certain conditions exist. What we need is just enough of a push to bring the recession to an end and provide needed support when the recovery begins without creating more problems in the future.