Recession likely ending in late 2009; recovery to be slow

James Bullard and other economy watchers say the recession may technically end in late 2009, but aren’t hopeful for a strong recovery cycle.

Bullard, president and CEO of the Federal Reserve Bank in St. Louis, told Roby Brock in an Aug. 27 interview that it may be 2011 before a full recovery is seen.

“I think officially the recession will end sometime in 2009 actually, but we won’t know that until 2011,” Bullard said during this interview with Brock.

The market watchers at The Kiplinger Report believe the end of the recession is around the fiscal corner. They cite improving durable goods orders and improving home sales and possible signs of economic warming.

“Though it will be a couple of months before third quarter gross domestic product is calculated, marking an end to the recession, it seems likely that this month will be the turning point,” Jerome Idaszak, associate editor of The Kiplinger Letter wrote in this report.

Bullard, in Little Rock to attend a conference at the University of Arkansas at Little Rock, said the economic data collected and confirmed in 2010 will likely show a late 2009 end to the recession. Although positive about the economic future, he said the recession is likely to be the “biggest one in the post-war era.”

“Even a shock this big and even a panic this big, we’ll recover and we’ll do well in the future,” he said.

Idaszak did note in his optimistic comments that some improvements in consumer spending were temporary boosts from government programs — Cash for Clunkers, for example — and that foreclosures could still be a problem.

“Welcome news that sales of new homes rose during July is tempered by the prospect of continued declines in prices, due to rising foreclosures,” Idaszak wrote.