Many economists declared the recession over after the third-quarter GDP release. We at CERF disagreed and pointed out that almost every long recession has had at least one quarter of positive growth during the recession. We also pointed out that many of the reasons for the relatively strong third quarter were temporary. We just didn’t see a reason for a strong fourth quarter, especially on a seasonally adjusted basis. Consequently, while many forecasters were revising their fourth-quarter estimates to reflect expectations of positive economic growth, our forecast was for a negative fourth quarter. Yesterday’s forecast also anticipates a negative fourth quarter.

So, today’s data release showing a second consecutive weekly increase in new unemployment claims surprised many. The press called it unexpected. It was not unexpected or surprising here at CERF. In fact, it is entirely consistent with our forecast.

We think that GDP will decline modestly in the current quarter and in the first quarter of 2010. Then, we expect a very slow recovery, held back by over-leveraged consumers and businesses, but especially by a weak banking system. The recovery in jobs will likely be weak and trail the GDP recovery by a few quarters.

To answer the question, we think the recession is not yet over, and it probably ends in the second quarter of 2010.