Economic Soft Patch 2: A Second-Half Rebound or Redux?

As this issue (August 2011) of the Advance & Rutgers Report was on press, the Bureau of Economic Analysis of the U.S. Department of Commerce released revised Gross Domestic Product (GDP) estimates on July 29, 2011 that showed the December 2007– June 2009 recession to be far deeper than originally determined. The 4.1 percent recessionary decline in real GDP was revised to a much larger 5.1 percent decrease; therefore, the analysis of economic output starting on page 8 of this report is slightly altered. Before the revisions, GDP had fully recovered all of its recessionary losses by the fourth quarter of 2010, 36 months after the recession began. However, the revised estimates show that GDP had not yet fully recovered its recessionary losses by the second quarter of 2011, 42 months after the recession began. This affects figures 3 and 4 on pages 9 and 10 of the report. But the conclusions in the report remain valid: The U.S. economy today is close (real GDP in the second quarter of 2011 is 0.42 percent below the fourth quarter of 2007) to producing the same pre-recessionary economic output with about 7 million fewer private-sector workers, and the time elapsed for full recovery of economic output (42 months and counting) is far more severe than the recovery time (21 months) from the July 1981-November 1982 recession, the previous post-World War II record holder.This report was published as Issue Paper Number 6, August 2011, in Advance & Rutgers Report