It's a recession, for real

A majority of Americans polled by CNN/Opinion Research Corporation started telling us in November 2007 that the economy had become "Issue #1." And from that point on, Americans have known and felt the reality of one of the biggest economic downturns in our lifetimes, fueled by job losses, inflation and falling home prices. It turns out Americans had it right. On Monday, the National Bureau of Economic Research confirmed that the U.S. has been in a recession since at least December 2007.

The NBER is a group of leading economists whose job it is to determine the start and end dates of economic downturns. So while you and I may have had a feeling, only the NBER can officially say, "We are now in a recession."

Let's consider some of the questions you might be asking regarding this announcement.

1) What took the NBER so long? The NBER has to, out of necessity, wait a while to declare a recession in order to process certain economic data. This recession dates back to last December because that's when employers started cutting jobs. In the last ten months alone, 1.2 million jobs have been cut. The NBER also looks at personal spending, gross domestic product, wholesale and retail sales, and industrial production to help make a determination.

2) How long is this recession going to last? There is no way to determine how long this downturn could last, but we can look to past recessions for some guidance. Since this recession stretches all the way back to last December, we are right now in the 12th month. There have been 11 recessions in U.S. history, and only two have lasted longer than 12 months (November 1973 to March 1975, and July 1981 to November 1982). In fact, the average length of a U.S. recession is 8 to 10 months, and the average global recession lasts 16 to 18 months. Unfortunately, this current one is indeed global, which means we're probably not out of the woods yet.

3) Now that it's official, does that change anything? The short answer is, "No, not really." There won't be as much hyped up news coverage on whether Alan Greenspan is calling it a recession or not. Other than that, you're not going to see the approach to fixing the economy change drastically. The U.S. government will continue to try to free up credit and work to stabilize the country's housing and banking industries - all key elements that could help end the downturn eventually.

Some economists speculate that our economy will reach its bottom, at earliest, in the second quarter of 2009. That would still make this the longest recession since the Great Depression. The government has certainly mobilized to address the current economic troubles, passing financial bailouts and economic stimulus packages. But, as with most economic problems, the real fix is time. Lakshman Achuthan, the managing director of the Economic Cycle Research Institute, speaking to CNNMoney.com, put it this way, "All the hand waving and real cash that policymakers are throwing at the problem won't change the fact we're stuck in this nasty recession. The ultimate cure of a recession is letting it run its course."

Remember, patience is a virtue.