NBER Confirms: U.S. Is In Recession

By John S. McClenahen Confirming what manufacturers have experienced for many months, the National Bureau of Economic Research (NBER) agrees that the U.S. economy is in a recession. It began this past March, ending an unprecedented 10 years of economic expansion, says NBER, a private, non-profit research organization based in Cambridge, Mass. NBER's judgment is widely considered to be the final word on the timing of U.S. business cycles. This time, the Sept. 11 attacks on New York and Washington apparently tipped an already delicate U.S. economic balance. "Before the attacks, it is possible that the decline in the economy would have been too mild to qualify as a recession," notes NBER's six-person business-cycle dating committee. "The attacks clearly deepened the contraction and may have been an important factor in turning the episode into a recession." However, the NBER does not use the "popular" definition of two consecutive calendar quarters of declining GDP to define a recession. Instead it focuses on monthly economic data and is more broadly based. The NBER defines a recession as "a significant decline in activity spread across the economy, lasting more than a few months, [and] visible in industrial production, employment, real income, and wholesale and retail trade." Incidentally, the NBER is not offering a prediction of when the current recession will end.

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