The U.S. has been in recession for one year
My very first post on this blog was in March and it was titled “The Economy Is Definitely In Recession.” Back then, this seemed like a stretch for a lot of people, but today the National Bureau of Economic Research (NBER), which makes the official recession call for the U.S., determined that the recession began in December 2007.
The U.S. economy entered a recession a year ago this month, the panel that dates American business expansions said today.
The declaration was made by the cycle-dating committee of the National Bureau of Economic Research, a private, nonprofit group of economists based in Cambridge, Massachusetts. The last time the U.S. was in a recession was from March through November 2001, according to NBER.
“The committee determined that the decline in economic activity in 2008 met the standard for a recession,” the group said in a statement on its Web site. The 1.2 million drop in payroll employment so far this year was the biggest factor in determining that start of the contraction, the group said.
Now, the only question is how long and how deep a recession we will have. I have long held that the U.S. will remain in recession until well into 2009. Let’s hope this is still the case. Given the recent sharpness of the downturn, we may have to wait until 2010 before we see any pickup.
How will we know the economy has turned?
The sequence goes from consumers’ real hourly earnings to consumer spending to industrial production to capital spending to corporate profits. Employment and capital (business) spending are lagging indicators and are not drivers of the business cycle at all.
So, when people start earning more money and industrial production picks up, we may be about to turn the corner. But, for now, that seems a long way off.
Recession in U.S. Started in December 2007, NBER Says – Bloomberg