Predicting when recessions start and end is tricky business. Typically, they begin at the peak of the business cycle. So, the start of this recession occurred when the unemployment rate was at near record lows, the stock market was at a peak and virtually all other indicators predicted nothing more than a moderating of economic growth. That was summer of 2007 – then came a sharp rise in gasoline prices which slowed the national economy. Still, it took a full year for unemployment rates to inch back to the sustainable level, and only a few other indicators suggested impending collapse.

To be sure there were storm clouds on the horizon. Housing markets in a few key areas had slumped, but the well known Case-Schiller housing index, which has tracked these things for almost twenty years, revealed this to be fairly common. On average, housing prices nationwide decline in alternate years. In fact, during the first year of this recession the economy actually enjoyed a quarter of growth. The credit crisis of last September accelerated economic decline that was broad geographically and sectorally. Virtually everyone everywhere could see signs of the recession.

The recession to-date has been long. The length has been punctuated by some growth – at least one quarter out of the last year. It has been deep, but not as deep as the 1981-82 ordeal. Comparisons with the Great Depression are still common. However, except for stock market volatility they are, as of now, simply silly reminders of the power of perception over easily measured reality. The next question is when will it end?

There are far more than tentative signs the recession is already over. Leading and coincident economic indicators almost universally point to a turnaround having occurred sometime between March and May. Even lagging economic indicators – especially labor markets, are showing some signs of recovery. Sadly, the unemployment rate can continue to rise well after the end of the recession. What has caused the recession to end?

Recessions end, with or without government intervention. In this case, the effects of the financial bail-outs and the stimulus probably help bolster confidence in a recovery. Otherwise, the effect of the stimulus hasn’t yet been felt in any meaningful way. And that’s the core of a new problem.

The worst is likely behind us, but that will prove scant reassurance to those of us who’ve lost years of savings or a job. We want to know what the recovery will be like. I am afraid that difficult times may well lie ahead. They can still be avoided, but it will take uncommon wisdom, self-discipline and courage from Congress. I am not optimistic.

A properly executed fiscal stimulus spends money during a downturn, but then moderates spending in a recovery. If that happens over the next two years we may well emerge from this to face a growing and robust economy. If we do not, we will inevitably go through a daunting bout of inflation, then another recession.