Bernanke at Brookings: “Technically, it may very likely be over, but…”

The “it” in the title for this blog is the recession, and the but is a big one — namely, that unemployment will probably continue to rise into 2010, and will still probably exceed 10% overall. Brooking has graciously made a video of Bernanke’s keynote, entitled “A Year in Turmoil” from Bernanke’s 9/15/2009 keynote one the one-year anniversary when the financial situation turned into a recognizable crisis when the government decided to allow Lehman Brothers to fail.

What does all this mean? I think it means that the ongoing mantra “Sit Tight” still applies to IT Professionals who remain employed, and that “Look Harder” does likewise for those of us in IT who are looking for work. As we already know, but will be forced to experience, the end of a recession occurs when various economic indicators (growth/shrinkage in inventories, changes in business postures, bank lending activity, and so forth) flip from negative to positive, even though this doesn’t translate directly or immediately into more tangible signs of recovery.

For ordinary IT professionals, real recovery occurs when the number of jobs being created finally exceeds the number being lost, so that demand for our services actually goes up. In the meantime, those mantras I cited in the previous paragraph remain in full force. Economists call employment a “lagging indicator” because it trails behind other market trends and activities, including those that generally mark the end of a recession.

As to when a noticeable recovery might get underway, look at the timing this way: if Bernanke is right, and unemployment continues to rise into 2010, we have to hope that a net gain in jobs shows up as early as Q2 of that year. That means at least six more months of keeping on keeping on before we can tell if things are improving in any way, instead of not getting too much worse. No wonder consumer confidence is depressed. Why shouldn’t it be?