We Are in a Recession

It’s now official.  We are in a recession and it started a lot longer ago than we thought – in December of 2007.  That’s the verdict of the National Bureau of Economic Research’s (NBER) Business Cycle Dating Committee, the non-profit organization that economists and the government regard as the arbiter on recessions.

According to the organization’s official statement, reported in Commercial Property News, “The committee determined that a peak in economic activity occurred in the U.S. economy in December 2007.  The peak marks the end of the expansion that began in November 2001 and the beginning of a recession.  That expansion lasted 73 months; the previous expansion of the 1990s lasted 120 months.”  Unfortunately, the economic think tank did not suggest when the economy is likely to turn around.  According to the Chicago Tribune, the recession may continue well into 2009 or even 2010.

The good news here is that we’re finally using a definition of recession that actually makes sense.  Using the standard definition, the current slowdown does not meet the usual criterion, which is two consecutive quarters that show a decline in the GDP (the first two quarters of 2008 were in positive territory, with the third quarter registering a 0.5 percent decline).  The NBER instead considered a wider variety of indicators, including employment, industrial production and personal income, in declaring the recession.