When the Recession Began

The current financial crisis, which was triggered by a collapse in the US housing market in 2007, led to the worst economic crisis in the US since the Great Depression of 1929. The US economy slipped into a recession in February 2009 after two consecutive quarters of decline in GDP growth. However, the National Bureau of Economic Research believes that the US economy slipped into a recession as early as in December 2007.

Signs of Recovery | First GDP Growth

The US Government, along with the Federal Reserve, has made great efforts to revive the economy. The US government announced the Trouble Asset Relief Program (TARP), a $700 billion bailout plan for banks. The Fed has aggressively cut interest rates to get credit flowing again. The Federal fund rate is currently at 0.25%. The efforts made by the US government and the Federal Reserve have resulted in a slight recovery in the US economy. The US economy grew at an annual rate of 3.5% in the third quarter of 2009 after three quarters of decline in GDP. These are positive signs that say that the recession is on the run.

Labor Market Uplift

The US labor market has shown signs of healing. For the week ended January 2, the claims for unemployment benefits rose only 1,000 to a seasonally adjusted 434,000. This was lower than the forecast for claims rising to 447,000. The four-week moving average was the lowest since mid-September 2008, dropping by 10,250 to 450,250. For the week ended December 26, 2009, the number of workers collecting benefits fell 179,000 to 4.80 million, much below the market expectations of 4.98 million.

Declining Unemployment

The unemployment rate remains unchanged in December 2009 at 10%. Employment losses in the fourth quarter of 2009 averaged 69,000 per month as against an average of 691,000 per month in the first quarter of 2009. The average monthly decline in employment in manufacturing for the last six months of 2009 was lower than the decline in the first six months of 2009.

Signs In The Market

According to the US Census Bureau, the US retail and food services market sales for December 2009 were at $353 billion, an increase of 5.4% over December 2008. The labor productivity of the non-farm business sector increased at an annual rate of 8.1% in the third quarter of 2009. The productivity in the manufacturing sector grew 13.4% in the third quarter of 2009.

Housing Market Recovery

The housing market has also shown some signs of recovery according to data from the US Census Bureau. Privately owned housing units authorized by building permits in December 2009 were 15.8% higher at a seasonally adjusted annual rate of 653,000 against the December 2008 figure of 564,000. Privately-owned new residential construction starts in December 2009 were 0.2% higher at a seasonally adjusted annual rate of 557,000 as against the December 2008 figure of 556,000.

Receding Recession

The economic data suggests that the expansionary fiscal and monetary policy adopted by the US government and the Federal Reserve have given a boost to the economy. There are still certain areas of concern such as the huge fiscal deficit and the high unemployment rate. However, the major economic indicators show definite signs of recovery in the US economy.