NBER says recession is already a year old

The National Bureau of Economic Researach has declared the beginning of the current recession to be December of 2007.  So for all you commenters and bloggers who insisted we were in one while I said otherwise, congratulations.  According to the closest thing we have to an authority, you were right (Wall Street Journal):

In a statement, the National Bureau of Economic Research said its Business Cycle Dating Committee determined that the U.S. entered recession in December 2007, marking the end of the economic expansion that began in November 2001. That month marked the end of the last recession for the U.S. economy.

. . .

The committee uses gross domestic product reports and gross domestic income estimates as a guide. Domestic production and employment are the primary conceptual measures of economic activity, according to the statement.

If you look at the actual NBER report, however, things get a little fuzzier.  The only indicator that has shown a consistent drop since last December was the payroll survey numbers (not to be confused with the unemployment rate survey, which they also used).  The rest of the data has “peaks” in activity anywhere between last November and this past June.

The Gross Domestic Product and Gross Domestic Income numbers – the big ones for economic production, “do not speak clearly about the date of a peak in activity.”  That’s a fancy way of saying, “we don’t know.”

That said, The NBER report does list the indices used, providing a good rule of thumb for the rest of us, although the ending statement – “there is no fixed rule about which other measures may contribute information to the process in any particular episode” – is not very helpful, and frankly just gives the group that Wizard-of-Oz feel that is not only unnecessary in the 21st century, but is borderline offensive.

Anyhow, one word of caution for the lefty bloggers hoping and praying for a major realignment: with this data, it is now clear that the 2008 election was being held in the midst of a year-long recession, a difficult prospect for any incumbent party (the last ones to pull it off were the Republicans of 1908).

Now, the voters in 1932 weren’t looking for a dramatic increase in government either, but Franklin Roosevelt convinced them of its wisdom; Obama could do the same.  My point is, he hasn’t done it yet, that’s all.

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4 Responses to NBER says recession is already a year old

  1. Jason says:

    According to Keynes, the root cause of an economic downturns is an insufficient aggregate demand. When the total demand for goods and services declines, businesses throughout the economy see their sales fall off. Lower sales induce firms to cut back production and to lay off workers. Rising unemployment and declining profits further depress demand, leading to a feedback loop with a very unhappy ending.

    http://nomedals.blogspot.com

  2. Uh…”the economic expansion that began in November 2001″? As I recall, the economy wasn’t doing so hot after 9/11…

  3. bluecollar49 says:

    Agreed Timothy…the problem has always been thou that this administration just would not say the ” R ” word, which led to this problem because basically we were driving with ” Blinders ” on.

    And to be fair, this is not just a Republican Administative problem, but rather a problem that was brought on by both sides of the aisle, and again it will take both sides to eventually bring us around the corner, but it’s going to be a long, and tough haul for us all.

    Lew
    http://www.lnph.us

  4. Hector M says:

    “with this data, it is now clear that the 2008 election was being held in the midst of a year-long recession”

    It was always clear to any objective observer. I believe the word you are looking for is inarguable, which these days does mean a lot.

    “there is no fixed rule about which other measures may contribute information to the process in any particular episode” – is not very helpful, and frankly just gives the group that Wizard-of-Oz feel that is not only unnecessary in the 21st century, but is borderline offensive.

    huh? That quote means that there are many different ways to view the problem and we should keep an open and honest mind when analyzing any economic data. In fact, this type of thinking is exactly necessary in the 21st century, and is a philosophy that helped Obama get elected.

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