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NBER: The Recession Ended In June 2009

Great news from the National Bureau of Economic Research:

Business Cycle Dating Committee, National Bureau of Economic Research

CAMBRIDGE September 20, 2010 – The Business Cycle Dating Committee of the National Bureau of Economic Research met yesterday by conference call. At its meeting, the committee determined that a trough in business activity occurred in the U.S. economy in June 2009. The trough marks the end of the recession that began in December 2007 and the beginning of an expansion.

Only a bunch of university professors sitting in Cambridge could believe either the start date or the end date for the recession.

After all, neither dates comports with the traditional marker of two quarters of negative or positive growth. Under the conventional definition, the recession only began in the middle of 2008, and it ended at the end of 2009. (Which is still 18 months.)

The recession lasted 18 months, which makes it the longest of any recession since World War II. Previously the longest postwar recessions were those of 1973-75 and 1981-82, both of which lasted 16 months.

But isn’t it wonderful now that it is officially over and we can get on with our lives?

In determining that a trough occurred in June 2009, the committee did not conclude that economic conditions since that month have been favorable or that the economy has returned to operating at normal capacity. Rather, the committee determined only that the recession ended and a recovery began in that month. A recession is a period of falling economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. The trough marks the end of the declining phase and the start of the rising phase of the business cycle. Economic activity is typically below normal in the early stages of an expansion, and it sometimes remains so well into the expansion.

Oh, now they tell us. But what was their reasoning for saying we were in a recession back in December 2007?

The committee decided that any future downturn of the economy would be a new recession and not a continuation of the recession that began in December 2007. The basis for this decision was the length and strength of the recovery to date.

Which actually is bad news for Mr. Obama, who will no longer be able to blame Mr. Bush.

The committee waited to make its decision until revisions in the National Income and Product Accounts, released on July 30 and August 27, 2010, clarified the 2009 time path of the two broadest measures of economic activity, real Gross Domestic Product (real GDP) and real Gross Domestic Income (real GDI)…

The committee concluded that the behavior of the quarterly series for real GDP and GDI indicates that the trough occurred in mid-2009…

The committee designated June as the month of the trough based on several monthly indicators. The trough dates for these indicators are:
Macroeconomic Advisers’ monthly GDP (June)
The Stock-Watson index of monthly GDP (June)
Their index of monthly GDI (July)
An average of their two indexes of monthly GDP and GDI (June)
Real manufacturing and trade sales (June)
Index of Industrial Production (June)
Real personal income less transfers (October)
Aggregate hours of work in the total economy (October)
Payroll survey employment (December)
Household survey employment (December)…

The current members of the Business Cycle Dating Committee are: Robert Hall, Stanford University (chair); Martin Feldstein, Harvard University; Jeffrey Frankel, Harvard University; Robert Gordon, Northwestern University; James Poterba, MIT and NBER President; James Stock, Harvard University; and Mark Watson, Princeton University. David Romer, University of California, Berkeley, is on leave from the committee and did not participate in its deliberations.

Yes, the NBER are a committee of college professors, mostly from Harvard.

They certainly wouldn’t be biased.

This article was posted by Steve on Monday, September 20th, 2010. Comments are currently closed.

4 Responses to “NBER: The Recession Ended In June 2009”

  1. Right of the People says:

    Well thank God it’s finally over. Would somebody please inform my bank account of this fact?

    Does the timing of the release of this report surprise anybody?

  2. AcornsRNutz says:

    “Economic activity is typically below normal in the early stages of an expansion, and it sometimes remains so well into the expansion”

    So how is that expansion? Nevermind. This statement says all I need to hear about this report.

  3. proreason says:

    The country would save a mint by outlawing economists and just letting the democrats declare when recessions begin and end.

    I mean, look at this…..the Lightworker ended the worst recession since the 1930’s five months after taking office. What could be better. Who needs an economist? The NY Slimes could have just told us about the miracle this time last year.

    But then again, maybe they thought it was best to hold back the good news until 53 days before the election.

  4. Astravogel says:

    Someone once said, “If you laid all the economists end to end,
    you still couldn’t get a conclusion.” Seems apt.

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