Economists Say the Recession Is Over. But Is It Really?

Julie Marsh
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julie marsh
Julie Marsh
CNN
reports that the National Bureau of Economic Research concluded that the recession ended last June. To clarify, that's June 2009. Apparently the economy's been on an upswing ever since last summer.

The president noted that "Americans are frustrated with the slow pace of the recovery and lack of jobs." He maintains that his economic initiatives, including the bailouts and Wall Street reform, prevented the recession -- the longest one since World War II -- from becoming a depression.

Problem is, economists are concerned that there isn't a driving force behind the recovery, and the president plans to disregard their advice to extend the Bush tax cuts.

Yes, the stimulus helped turn the economy around. How could it not? An infusion of cash, a long list of government projects, the need for workers to turn those plans into realities. But that cash? It comes from us, and we're a finite source of revenue.

The August Congressional Budget Office report on the stimulus advised that "the effects of [the stimulus] on employment and unemployment are expected...to wane gradually in 2011 and beyond." Hence economists' anxiety about the strength of the economic recovery and the possibility of a "double-dip" recession.

Meanwhile, the government is opposed to extending the Bush tax cuts (as economists have advised), insisting that the additional tax revenue is needed to pay for the stimulus. Plus, rich people won't spend the extra cash. They'll just invest it, which doesn't help anyone except other rich people.

Whether you agree or disagree (and in case you're not fluent in sarcasm, I disagree), it's safe to say that the converse -- higher taxes, no matter what income level -- means less consumer spending. If I've got less money in my paycheck, that's less disposable income.

Plus, many who've survived the recession with jobs and homes intact have done so by extending themselves a bit. They've taken on second mortgages and credit card balances, in addition to giving up those nice-to-have's like vacations and dinners out and home renovations. They're not ready to start giving up even more of their paychecks to help the country climb out of this hole when they're standing in one of their own.

In pure economic terms, the recession may be over. But if the tax cuts expire as scheduled, I expect we'll soon be dining on a double-dip.

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