One possible reason for the disconnect between popular views and the official economists’ view of the country’s “recession” status is semantic.
Economists and laypeople mean different things when they use the word “recession”: To most people, it refers to the level of economic activity. To economists, it refers to the change in economic activity.
That is, most people associate a poor economy — that is, low levels of spending, high levels of unemployment — with the word “recession.” They use the word to refer to times when the country just feels lousy.
But economists use the term “recession” to talk about the economy’s direction. Regardless of whether the level of economic activity is good or poor, is the economy shrinking, or is it growing? The National Bureau of Economic Research says that the economy stopped shrinking in June 2009. Then it started growing again, even though the pitifully slow pace of growth still meant the level of economic activity was horribly depressed.
Here’s a look at absolute levels of gross domestic product to give you a sense of what I’m talking about. Output has been rising for the last year, but absolute levels of economic activity are still low relative to their levels before the recession had begun:
Why preventing a "recession" may be misguided. Who cares, if unemployment is close to 10%?