Still Feels Like a Recession

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January 5, 2011; Source: Bloomberg News | Who should nonprofits believe for financial planning purposes? Many credible economists have pronounced the recession officially over, that the nation is firmly on the upswing, consumer confidence is on the rise, corporate investment is increasing, the economy is now adding rather than shedding private sector jobs, and so forth.

But is the recession really "over?” If it is, what does "over" really mean? And for nonprofits, when will the effects of the now-ended recession show up in their budgets in the form of an upsurge in charitable and philanthropic giving and a reduction of the overwhelming service demands from victims of the economic freefall?

Rather than polling economists, we think that the policies of the Federal Reserve might be telling. The official position of the Ben Bernanke-led Federal Reserve is that "they'll probably push ahead with unprecedented stimulus until the recovery strengthens and many of the 15 million unemployed Americans find work." Notes from the Fed's Dec. 14 meeting revealed the policy-makers' belief that the pace of the recovery will "remain modest, with unemployment and inflation deviating from the committee's objectives for some time."

Whether or not the American press and pundits believe or disbelieve the economists' rosiest projections, the stock markets around the world responded to the Fed's actions, reading it as evidence that regardless of what the economists say, "the U.S. economic recovery is not strong enough to scale back its stimulus measures."

If the Fed is hinting that the recession might not be over, especially in terms of the millions of Americans surviving based on extended unemployment benefits, what is the message for the U.S. nonprofit sector? What should nonprofits do and how should nonprofits plan when the economists say things are looking up, the Fed says not so fast, and their own instincts based on the clients and constituents at their doors suggest that for the poor, the underemployed, and the unemployed, the recession is still raging?—Rick Cohen