Have your say: Dr Bollard says the recession is over. Is it really?

For someone announcing a record cut in the Official Cash Rate of 150 basis points, Reserve Bank Governor Alan Bollard seemed awfully relaxed about the outlook for growth. The Reserve Bank sees the annual GDP growth rate bottoming at 0.2% around the middle of 2009 before slowly recovering through late 2009 and then growing a strong 4.3% in the year to March 2011. In fact, Bollard says any recession is likely to be shallow. Dominion Post Business Editor James Weir asked Dr Bollard at the bank's press conference this morning about whether the recession might end after 18 months and what it might mean for unemployment and house prices. "We're a little bit more optimistic," Bollard replied. "If you want to be technical about it we believe the recession has ended and we have positive but very low growth for the next 4 quarters. It's only towards the second half of next year that one can be sure that we're getting solid growth," he said. "Those numbers in New Zealand can jump around and historically they tend to improve rather than getting worse. You may find that in a couple of years Statistics NZ says we didn't have a recession. That's quite within the bounds of statistical probability," he said. Really? What I think. This feels like a bad recession. Maybe that's because we haven't had a really bad one for quite a while. I remember trying to get a job in 1991 when unemployment was close to 11%. Now that was a recession. The youth of today don't know how lucky they are... Unemployment is now just over 4% and the Reserve Bank is forecasting it will rise to 6% before falling back again. But Bollard's comments did make me have a double take. How can he be so sanguine? He has just had to cut the Official Cash Rate by a record 150 basis points to 5%. He argued he needed to do this because of the worst financial crisis in decades and a sharp slowdown in global activity that will drag on export prices and receipts. He is even forecasting a 16% fall in house prices from their 2007 peaks. He even said there was a risk inflation could drop below the 1-3% target band. The Reserve Bank was caught out in 2004, 2005, 2006 and 2007 by the unexpected strength of consumer spending because of the longer and stronger boom in house prices driven by rampant growth in household debt. I worry it may be caught out again on the other side of the consumer debt boom by a sustained de-leveraging from consumers who dismantle the ATMs built into their houses. I reckon we're in for a longer and deeper recession than Dr Bollard reckons. It certainly doesn't feel like the recession is over. If anything it is deepening. Your views? Comments below please