Can the U.S. economy be said to be out of recession when employers are still shedding jobs?  The official scorekeepers of U.S.business cycles at the National Bureau of Economic Research said "yes" late last week, and officially declared the recession of 2001 to be over.  But the long time they took in deliberating over their decision tells us that it wasn't an easy call.

In one sense that seems quite odd, because by the most comprehensive measure we have of economic activity -- Gross Domestic Product-- the recession of 2001 was a very mild one. Buoyed by consumer spending, which never retreated at any time during the entire downturn, the dip in economic output suffered during the first three quarters of 2001 was quickly made up in just three quarters thereafter.  That makes this recession the mildest on record for more than 30 years.  

That might come as a surprise to anyone who has been reading the headlines for the last few years.  It’s tempting to simply blame this on the business media, whose skill at delivering bad news is hard to overestimate. But the truth is that this really has been a very severe recession, at least for some pieces of the overall economy.

When you look at business investment,manufacturing employment, and stock market returns, this recession ranks with the worst of them all.  When you put it all together, it's clear that you can't really talk about the recession of 2001 without describing the boom that preceded it.

That boom helps explain how the economy could continue to operate -- with rising productivity, no less -- with such dismal levels of business investment.  Beginning three quarters before the official start of the recession in the spring of 2001, inflation-corrected business fixed investment tumbled by more than 13 percent.  It has not budged significantly from that low point since.  A "typical" recession would see declines in investment between 2-4 percent, with recovery kicking in much earlier.

Everything that led to two-fisted spending in the years prior to 2000 -- the rise of the internet, the Y2K scare, and the deregulation of the telecom industries -- has seemed to turn on a dime in the time since.  The data clearly indicate that businesses across all sectors of the economy have been learning how to get more out of the equipment they already have.

Of course, most companies' stock prices had sunk so low that there was really little other alternative.  The decline in the S&P 500 index mirrors the behavior of investment spending almost exactly, except with even more severity.  Down by more than 40 percent since the pre-recession peak, the market's plunge has been more severe, and more prolonged, than recessions past.

The behavior of employment in the current recession, on the other hand, does find some precedent in our recent history.  The second consecutive "jobless recovery" -- the first being the next most recent recession of 1991 -- tells us something important about how labor markets have changed.  The extensive use of temporary and contract employees, the prevalence of just-in-time production methods, and the necessity of improving productivity to compete in the global marketplace have made businesses more hesitant to ramp up payrolls in the mere anticipation of increased demand.

If it doesn't feel like a recovery outside the window of your business, take heart.  You are not alone.  But it’s something we're all going to have to get used to.