February 25, 2011

Hiking up recovery mountain

If you, like so many others, are still hurting financially, you may wonder what the economists are thinking when they talk about our economy being in recovery.

According to the National Bureau of Economic Research, the recession ran from December 2007 to June 2009. If we've been in recovery for a year and a half, why does it still feel like a "recession" to so many?

It's important to understand what economists mean when they speak of "recession." If you graph them, periods of growth, or expansion, are rising lines leading to peaks. Periods of contraction, or recession, are descending lines that lead to troughs.

The GDP, one of the main factors in measuring economic growth, has been rising since June 2009. Though that growth was sometimes small, the numbers were positive, as opposed to the negative numbers seen during the recession.
Photo by Christophe Libert

So why does recovery seem so crummy?

Imagine you're climbing a mountain. When you reach the peak, you stand in the bright sunshine and can see for miles.

Then you fall. You roll down that steep slope for a year and a half. You land in a valley. Bruised, but not broken, you stand up. That mountain behind you now blocks the sun. You're in shadow.

You can't go back the way you came. Ahead of you is another mountain -- maybe not as tall as the one you fell from. It has a shallower slope. You begin climbing. Slowly, surely, you ascend. You leave the valley floor behind. But the next peak is still far away, and you are still in shadow.

In The Great Reset, Richard Florida compares the 2007-2009 recession to earlier ones. "Recovery from both the Long Depression of the 1870s and the Great Depression of the 1930s -- the First and Second Resets -- took the better part of two or three decades."

He says forecasting where we'll be once the present crisis is history would be like predicting "the full flower of postwar suburbanization from the vantage point of Franklin Roosevelt's inauguration day in 1932."

As we climb, remember we have a mighty counselor who climbs with us out of the valley. "The people walking in darkness have seen a great light; on those living in the land of the shadow of death a light has dawned." — Isaiah 9:2

A slightly different version of this essay originally appeared at the Central Florida Christian Chamber of Commerce blog.

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