The Recession Has (Officially) Ended
By CATHERINE RAMPELL
ECONOMIX
September 20, 2010, 10:45 am
12:08 p.m. | Updated
economix.blogs.nytimes.com
The recession officially ended in June 2009, according to the Business Cycle Dating Committee of the National Bureau of Economic Research, the official arbiter of such dates. ( nber.org )
As many economists had expected, this official end date makes the most recent downturn the longest since World War II. This recent recession, having begun in December 2007, lasted 18 months. Until now the longest postwar recessions were those of 1973-5 and 1981-2, which each lasted 16 months.
Recession and expansion dates are based on various economic indicators, including gross domestic product, income, employment, industrial production and wholesale-retail sales. The Business Cycle Dating Committee typically waits to declare that the economy has turned until well after the fact, when it has a longer track record of economic data to confirm a new trend.
The bureau took care to note that the recession, by definition, meant only the period until the economy reached its low point — not a return to its previous vigor.
“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,” the bureau said. “Rather, the committee determined only that the recession ended and a recovery began in that month.”
The committee had previously met in April to consider whether an end to the recession could be declared, but members decided that the data were still inconclusive. Since that time, however, the Bureau of Economic Analysis has released revised numbers for output and income growth over the past year, and the addition of this new information helped push the committee towards declaring an official turning point.
“That gave us the definitive picture of what happened in 2009,” said Robert J. Gordon, a member of the committee for over 30 years and an economics professor at Northwestern. “At this point we’re not going to get any new information to consider until July 2011. So we knew that if we’re going to do anything, we should probably do something now.”
Professor Gordon also said that nearly every indicator that the committee looks at simultaneously reached its low point in June 2009, which made that month a relatively easy selection as the official turning point. The main exception to this trend was employment, which troughed six months later in December 2009.
This lag has led many to refer to the current situation as a “jobless recovery,” and had even sparked suggestions that the weak job market should play a bigger role in determining recession start and end dates.
Professor Gordon notes, however, that the lag between a turnaround in gross domestic product and a turnaround in the job market was even worse after the 2001 recession.
“In that episode employment continued falling for 19 months after output troughed,” he said. “If anything the case for putting employment more prominently in the committee dating was weaker this time.” |
