Is the Recession Over?

Is this leg of the Great Recession over? Or has the government duped us yet again?

Capacity utilization inched up a few tenths of a percent in July, the Fed proclaimed today. American companies utilized 68.5% of their productive potential, up from June’s record low of 68.1%. We have a particular affinity for this D-list data point…aside from measuring our collective utility, it’s a worthy economic indicator:


So is this it? Despite so many other feelings to the contrary, is the recession (as we know it) over?

The reason behind capacity utilization’s meager rise provides the best answer: July’s improvement was driven entirely by auto manufacturers coming back to life. They had to bump up production 20.1% to keep up with the initial response to “cash for clunkers.”

Even though it’s not legit, we wouldn’t be surprised if we are at or near the technical end of this recession. Between all the government stimuli and manipulation, the political pressure on the current administration to “do something,” this massive bear market stock rally and Uncle Sam’s inclination to fudge economic data…would you really be surprised if this thing ends in theory long before it’s over in practice?

Of course, the National Bureau of Economic Research (NBER) will be of no help. Having no interest in real-time forecasting, they won’t officially call an end to this recession until it’s long past. It took until December 2008 to tell us that this whole mess started in December 2007. Heh…by the time the NBER calls an end to this one, we might have begun another.