24/09/2010
The American recession is finally over, according to reports cited in The Economist.
In fact, it officially ended in June 2009 which made the recession of 2007-09 the longest in America's postwar history. The 18-month recession surpassed the 16-month contractions in the economy seen in 1973-75 and 1981-82.
The news was only released this week because the NBER Business Cycle Dating Committee wanted to wait for the National Income and Product Accounts released at the end of July and August this year before declaring the end date of the recession.
The committee said in a statement: "The committee noted that in the most recent data, for the second quarter of 2010, the average of real GDP and read GDI was 3.1% above its low in the second quarter of 2009 but remained 1.3% below the previous peak which was reached in the fourth quarter of 2007."
"The trough marks the end of the declining phase and the start of the rising phase of the business cycle," explained the committee.
The news has been reflected in US businesses, reports The Sydney Morning Herald. After-tax profits rose by 24.3% in real terms over the four quarters to June, which isn't too far below the average for the corresponding period of previous recoveries.
According to The Wall Street Journal, shares rallied on the back of the news.
It's thought the news will bolster business confidence on both sides of the pond. With news that business profits grew by almost a quarter, businesses in the UK should be looking to America as an example of the shape the economic recovery can take. Through invoice finance and other methods of cash-generation, businesses can expand in order to ensure they're one of the companies seeing such hopeful boosts in profits.
Laura Nineham