Finally!

On September 16, 2009, Warren Buffett slapped a gravestone on the Great Recession: "I think the odds are very much against getting significantly worse. [The economy] has sort of plateaued at the bottom right now."

One year later -- almost to the day -- the U.S. government decided that Buffett was right. According to official statistics from the National Bureau of Economic Research (NBER), the Great Recession ended in June 2009. And no sooner had NBER announced its findings than Buffett chimed in with a further prediction that "we will not have a double-dip recession at all."

So I'm glad that's settled. Now, can we all get back to growing the economy again?

Not so fast
As fellow Fool Morgan Housel reminded us last month, calling the timing on a recession's beginning or end "isn't exactly a science." So before we toss that last shovelful of dirt on the Great Recession's casket, and begin planting new sod, perhaps we should take one last peek into the hole and make sure this thing really is well and truly dead? Fortunately, our friends over at the Consumer Metrics Institute, "Home of Daily Consumer Leading Indicators," have done just that for us.

In a report released Monday, CMI broke down the Great Recessionary Data for us, timelining the disaster in a series of six successive "events." Unlike NBER, and unlike Buffett, CMI doesn't see the Great Recession as something that started, ended, and is now officially R.I.P. Rather, CMI sees the Greater Recession as a single, long-drawn-out event -- which is still unfolding. Quoting at length from this week's report:

  • The recession most likely started with a drop in consumer confidence, triggered by bad financial news (Bear Stearns, Lehman Brothers, etc.) and media coverage of the "Housing Crisis"/subprime loans.
  • The initial recessionary downturn was accelerated by political uncertainties in 2008 and rising energy prices.
  • An organic recovery started late in 2008 when energy prices collapsed, lasting well into 2009 with help from short term stimuli ("Cash for Clunkers" and the Federal New Home Tax Credit).
  • During 2009 (and now deeply into 2010) a ruthless corporate obsession with short term earnings exacerbated the already weak employment picture, even as equity markets recovered.
  • By late summer 2009 consumers realized that this was not a "garden variety" recession, as unemployment persisted and fixed incomes plummeted.
  • By early 2010 demographically appropriate "frugal" consumer habits had emerged, reducing discretionary spending in favor of increased personal savings (or the paying down of debt).

And for the slower members of the class (including yours Fool-y), CMI then drew us a picture of how all this played out:

Richsmithgraphic


Now, Warren Buffett may say this isn't a double-dip picture, but it sure as heck looks like one to me. The economy was growing until it exploded, began recovering around about the time Buffett said the recession was "over" -- and then began a sudden, dramatic, and even deeper dive around November/December of last year. And, as an example of CMI's prophesied "new frugality," we're seeing exceedingly weak profits reports (down 19%, 9%, and 7%, respectively) roll in this week from the likes of such consumer-sensitive manufacturers as Kimberly Clark (NYSE: KMB), Whirlpool (NYSE: WHR), and Procter & Gamble (NYSE: PG).

And that was the good news ...
Now for the bad news. As tallied by CMI, what we now refer to as the "Great Recession of 2008" had a total of 793 percentage-days of contraction over the course of 221 days. (Hmm? What's a "percentage day?" Think of it this way -- if every day of the year, the U.S. economy was 1% smaller than in the previous year, that would be 365 percentage-days of decline. So 793 percentage days -- that's like the whole economy trudging along 2.2% slower than it used to, with not a single day of good news anywhere in sight.)

In short, the Great Recession has now morphed into a broader, longer-drawn-out, Greater Recession. So far in 2010, we've already racked up 820 percentage-days of contraction, and the year's not over yet. While not everyone's suffering equally (Ford (NYSE: F) just reported a 30% jump in quarterly sales. Amazon.com's (Nasdaq: AMZN) year-to-date sales haul is 40% greater than last year), there is evidence aplenty that all is not well. Before accounting for forever-fudgeable loan-loss provisions, YTD revenues at all four of America's remaining megabanks -- Bank of America (NYSE: BAC), Citigroup (NYSE: C), JPMorgan Chase, and Wells Fargo -- are down from last year.

Foolish final thought
In the spirit of Halloween, I've saved the scariest statistic for last. According to CMI, over the last 60 days the U.S. economy has averaged daily "growth" vacillating from about negative 5.5% to even-more-negative 6.1% -- and according to CMI, the data it mines for these statistics generally front-run official government GDP growth reports by about three months. Put it all together, and this suggests five straight months of mid-single-digit growth declines, with little indication of any uptrend.

Maybe that's not a "double-dip recession." Maybe it's just the "new normal." Either way, it sure ain't pretty.