Recession Over, but Troubles Remain on Slow Road to Recovery
The National Bureau of Economic Research, arbiter of business cycle dates, on Sept. 20 ruled the recession that began in December 2007 had officially ended in June 2009. The pronouncement wasn't a huge surprise, as many economists long ago concluded that the recession ended sometime in third-quarter 2009. The downturn lasted 18 months, the longest recession since World War II.
The U.S. unemployment rate was 5.0% when the recession began and 9.5% when it ended. The unemployment rate now, more than a year into the economic recovery: 9.6%.
During the recession, the U.S. ad market cut 176,100 jobs -- more than one in 10 positions. Since the recession ended, ad-market employment has dropped by 36,600 jobs.
There are positive indicators. The U.S. ad market -- advertising, marketing services, media -- has seen job gains in four of the five most recent months for which data are available.
Ad agencies, public-relations agencies, market research, internet media and TV broadcasting all have added jobs this year, meaning they employ more people now than they did at the start of the year, according to Ad Age DataCenter's analysis of Bureau of Labor Statistics data.
There's even an encouraging indicator in newspapers, which have undergone a massive downsizing. Newspapers' recent monthly job cuts are at the lowest level since the start of the recession; the rate of decline is slowing.
But overall employment in the ad market remains far below its pre-recession level.
The big issue -- for the nation, for consumers, for people who work in advertising and media -- is jobs. Without strong job growth, it's hard to envision a robust economy and sustained recovery.
The official end of the recession could be a talking point for incumbent politicians hoping to keep their jobs on Election Day. But it's hard to see how consumers will get excited about a technical end to a recession given weak economic growth and high unemployment.
It's also hard to see how the belated pronouncement will much affect advertisers or advertising. As Ad Age wrote when the last recession was decreed over: "Advertisers probably won't react. Companies' ad budgets are driven by revenue, profits and sentiment about the outlook rather than pronouncements about where the economy was."
The National Bureau of Economic Research's business-cycle dating committee -- a group of academics from Harvard, Stanford and other universities -- made clear that its pronouncement about the end of recession was not a comment on the state of the current economy.
"In determining that a trough [end of recession] occurred in June 2009, the committee did not conclude that economic conditions since that month have been favorable or that the economy has returned to operating at normal capacity," the bureau said. "Rather, the committee determined only that the recession ended and a recovery began in that month. ... The committee decided that any future downturn of the economy would be a new recession and not a continuation of the recession that began in December 2007."
Worries about a double-dip recession seem to have faded a bit in recent weeks. Still, there's valid reason for consumers to be cautious about near-term prospects for the economy.
It's worth recalling the sequence of the last double dip. In July 1981, the bureau pronounced that a 1980 recession had officially ended in July 1980.
Just months later, in January 1982, the bureau announced that a new recession had begun in July 1981. The double dip was beginning in 1981 even as headlines were being written about the end of a recession.
At least for now, the economy is growing. Gross domestic product growth turned positive in third-quarter 2009. GDP continues to grow tepidly, with an annualized rate of 1.6% in second-quarter 2010.
U.S. measured-media spending began slipping in fourth-quarter 2007 and kept sliding through 2009, according to WPP's Kantar Media. Ad spending growth resumed in first-quarter 2010 (up 5.1% from year-earlier depressed levels) and continued in the second quarter (up 5.4%). But comparisons against last year are easy. Measured media spending in 2009 tumbled 12.3%.