Fisher Investments Editorial Staff
US Economy, GDP

Bye-Bye, Recession?

By, 09/17/2009

Story Highlights:

  • Ben Bernanke and others have stated they believe the recession is likely over.
  • Global GDP and other economic data also point to a return to growth.
  • These developments might be therapeutic for weary investors, but "official" recession beginning and end dates mean little to future of the economy and stock market.


In the wake of a brutal bear market and a lingering recession, weary investors are understandably hearkening for the all-clear. Fed Chairman Ben Bernanke declaring the recession "very likely over " has likely been music to their ears. And he's not alone—Mervyn King, Governor of the Bank of England, recently said he too believes "growth has resumed." Even former Fed head and current White House advisor Paul Volcker weighed in today, saying the economy was in the "early stages of recovery ."

Has the global recession finally come to an end? Maybe. Maybe not. Major economies in Europe and Asia are indeed reporting growth. Japan, Germany, and France all expanded in the second quarter. Others, like Italy and Spain, contracted but at a slower-than-expected pace. Earlier this week the European Commission said it expects Q3 Eurozone GDP to be positive. And emerging economies are forging ahead, led by strong growth in China, now the world's third largest economy.

But as much as we, as humans, like to have clarity—clear beginning and end points to any phenomenon—whether or not the US and global recessions have officially ended means little to future economic activity or stock prices. First, recession beginnings and ends aren't usually dated until well after they've passed. Second, stocks do not wait for confirmation or clarity. They move ahead, based on forward-looking expectations. So while we can quibble about whether the recession ended this month or last, or won't end for another quarter yet, since March, stocks have been telling us investors expect better times are in the fore. Stocks aren't so fussy about official dates. Those waiting for official confirmation have missed a very nice 68% move in global stocks since the March 9th low.Clarity is expensive.

*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.

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*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.


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