Many American consumers and businesses have been closely watching for verifiable signs that the US economy is, in fact, returning from recession. Many top economists, including Federal Reserve Chairman Ben Bernanke have been saying for weeks that that is the case, but after a very dismal period for many homeowners and employees, proof is helpful.

The report from the Commerce Department Wednesday (September 30) showed a second quarter drop of just .7 per cent on the gross domestic product. This was significantly less than previous estimates of a one per cent drop and the 1.1 per cent forecasted drop by analysts.

Widely considered the best way to measure a country’s economic health, many point to the tremendous improvement following the 6.4 per cent annualized fall in the GDP during the first quarter.

Many of the economists that have been saying that the recession is over for weeks are already calling for up to a three per cent growth during the third quarter, which officially ended Wednesday. Estimates of the third quarter’s growth will come soon, but the final revised number will be out at year’s end.

Of course, there is debate about what has prompted the improvement during the latest period. But many analysts point to the effect of the $787 billion O’bama stimulus package, which included the very popular cash for clunkers program that rewarded people who traded in old cars for newer, more efficient ones.

Underlying data, including the housing index, retail sales, and other areas have trended from bad to flat to slightly positive over the last several months. The results of these various sectors of the economy are what prompted many in the Fed to express confidence of an end to the recession weeks and months ago.

It is not surprising that consumer confidence, though improving, has still showed cautious optimism on the parts of Americans. Many are still reeling from the record foreclosures, loan defaults, job losses, and more financial burdens. Unemployment is still just shy of ten per cent, so many Americans, even without the recession, are without jobs.

As businesses begin to gain confidence now that all signs upward, it is expected that many will hire back displaced workers, or begin expanding and hiring for new jobs. The labor environment is likely going to be the last piece of the economic puzzle to fall back into place.

Neil Kokemuller
9:39 AM EST
Wednesday, September 30, 2009

Neil Kokemuller is an Associate Professor of Marketing at Des Moines Area Community College in Des Moines, Iowa, USA. He has a MBA from Iowa State University. He is also in house stock market commentator at Live Charts UK, where you can find real time charts and share prices.

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