By Robert Johnston

In mid September, Washington announced that the recession was most likely over. Yet unemployment is still high, sales are still low and most consumers are still feeling a little nervous about spending. So how can it be over?

The definition of an economic recession is complicated, but is defined by key indicators above or below a specific rate, for a specific time period—usually about three months. That’s why economists can’t tell us the economy is experiencing a recession until we are already three or four months into it.

Defining the end of the recession is a little easier. When one or more of those key indicators stops declining at or about the defined rate, it's over. So even though certain numbers are still bad, or still declining, if they aren’t declining at the defined rate the recession could still be over.

Think of it this way—when you get the flu or a cold, you probably don’t know you’re sick until you are really sick. Looking back, you can probably see some indicators that you were about to get sick, but you probably didn’t recognize them at the time. As you start to recover, you may feel "better" (better than yesterday) but you are still not 100% for a few more days. That’s where we are in the economy—we’re better than we were last quarter, but we’re still not quite the same.

Did the stimulus package work? Yes, no, and maybe. Certain industries, civil engineers, and highway construction companies definitely benefited from the stimulus package. Unfortunately, much of the money went to fund projects that could be started quickly, rather than fund projects that really needed to get done. It would be the equivalent to a homeowner getting a cash bonus to be used for "home improvement" and using that money to replace a light fixture (that still worked) rather than use it to fix the leaking roof.

“Cash for Clunkers” certainly helped the auto industry sell a lot of cars, but most retailers were very frustrated by the process they had to go through to get reimbursed, and were glad when the program was over. The real problem now is, how are we going to pay for this? The "leaking roof" still needs to be fixed, and meanwhile we have to pay for the light fixture….

There was a saying in my house, “A cold usually lasts about a week, but if you go to the doctor, you can feel better in about seven days." Likewise, most recessions last about 18 months. This one was a little worse because of the mortgage collapse, but most experts still agree that this recession should not last more than two years, and it looks like they were right.

Consider this scenario: If someone typically buys a new car every four years, during tough times he may wait another year or two and try to save some money. Eventually his old car will start to break down a little more than he is comfortable with and he will decide, “I’ve suffered long enough, I need a new car.” Car dealers will then start to sell off their inventory, and eventually will need to order more from the manufacturer. The manufacturer will increase production, but will wait as long as possible before they start bringing back laid off workers. Once those laid-off workers start receiving a paycheck again, they will buy washing machines, lawn mowers, and other goods—and those industries will bring back their laid-off workers, and the cycle continues.

The bottom line is that we are not out of the woods yet, but we can at least see the light at the end of the tunnel. The best thing you can do now is to continue to market and promote your business, even if people can’t afford to buy from you now. In the next six to nine months they will need your products or service. Who do you want them to call then, you or your competitor?

Robert Johnson is President & CEO of Exton Region Chamber of Commerce, www.ercc.net.