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Fundranker Blog—NBER Recession Declaration

NBER Recession Declaration

The National Bureau of Economic Research announced on December 1 that our economy entered a recession in December, 2007. This is par for the course for NBER, which in its own words, always waits long enough so that the existence of a recession is not at all in doubt and until it can assign an accurate date. Apparently, NBER is not in the business of calling recessions in a timely fashion; it is only in the business of saying when they begin and end, and it waits until it is absolutely certain to make its announcements. Despite this completely unsurprising announcement coming an entire year after the recession started, there is not much doubt that it contributed to the DJIA’s 678 plunge on December 1. Maybe this final and definitive corroboration of the fact of recession was like the straw that broke the camel’s back.

The NBER is equally careful on saying when recessions end. It did not announce the end date of the last recession (November, 2001) until July 17, 2003, nearly two years later. In fact, the NBER did not announce the beginning of the last recession (March, 2001) until November 26, 2001, which turned out to be the month it ended.

It seems pretty safe to say that is not the case this time, as there is little doubt we are still in recession and will be into 2009, if not longer. It remains to be seen how huge economic bailout and stimulus plans, both recent and soon to come, will impact the eventual end date of this recession. The only safe bet now is that this recession will be over long before the NBER tells us so.

Posted 12/7/08 7:45pm ET in Economy

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