The Business Cycle Dating Committee of the National Bureau of Economic Research had determined that the U.S. economy has been in recession since December 2007.
Although a recession is generally defined as two consecutive quarters of declining activity, the panel has its own criteria for determining a downturn. "A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income and other indicators," the panel said.
"A recession begins when the economy reaches a peak of activity and ends when the economy reaches its trough. Between trough and peak, the economy is in an expansion." The committee said it "identified December 2007 as the peak month, after determining that the subsequent decline in economic activity was large enough to qualify as a recession."
According to government data, the U.S. economy contracted at a 0.2% pace in the fourth quarter of 2007 but grew 0.8% in the first quarter and 2.8% in the second quarter of 2008. It then contracted 0.5% in the third quarter, based on a provisional estimate.
But the gross domestic product (GDP) data may have been skewed by tax rebates that stimulated consumer spending, according to analysts. The NBER said "we do not identify economic activity solely with real GDP, but use a range of indicators" in determining the onset of recession.
A major factor in determining recession is employment, which has been declining since last December, the panel said.
The NBER makes no forecast on how long a recession will last, but said that in the past they have run from six to 18 months. The panel said it has no definition of the term "depression."
The White House acknowledged the NBER conclusion and said it has been working to foster recovery. "NBER determines the start and end dates of business cycles, and they've done that," White House spokesman Tony Fratto said. "But what's important is what is being done about it. The most important things we can do for the economy right now are to return the financial and credit markets to normal, and to continue to make progress in housing, and that's where we'll continue to focus."
Copyright Agence France-Presse, 2008