Recession over; recovery still in progress.

The NBER has officially called the end of the recession: June 2009.

Of course the recession is measured from peak to trough, and crawling up the other side takes time. So just how bad is it currently, now that the Germans have stopped bombing and London has begun to be rebuilt?

The above graph shows that real GDP per capita peaked in 2007 Q4 at $44,062.22, plunged to $41,698.40 in 2009 Q2, and is currently $42,576.71. The peak and trough of real GDP per capita here matches the beginning and end of the NBER-defined recession. The current level of GDP per capita is the same as it was in 2005 Q3, so nearly five years of GDP have been wiped.

How the US performs from now on will be the real determiner of the recession's effect. While the recession was underway, many commentators (including Paul Krugman) wondered whether this would be an "L" shaped recession - a crash followed by a long period of low growth. The graph above shows the "L" beginning to form, though it may also be the beginnings of a "U" or "V".

My opinion is naturally quite negative. Total credit market debt for 2010 Q2 was 357.15% of GDP ($52.0545 Trillion), down from the peak of 374.15% ($52.5097 Trillion) in 2009 Q2 but still massively high in comparison with the rest of America's financial history. This means that much of the 30 year debt bubble accrued by US financial companies has a long way to go before it returns to normal. I can foresee very slow growth in GDP over the next few years for the US with the continual possibility of capital flight.

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