Jobs report may speed up official declaration of recession’s end
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The economists who decide on the official beginning and end dates of U.S. recessions may be getting closer to declaring the latest one terminated.
From Bloomberg News:
The biggest increase in employment in three years [in March] makes it “pretty clear” the deepest U.S. recession since the 1930s has ended, said the head of the group charged with making the call. “I personally put lots of emphasis on employment,” Robert Hall, who heads the National Bureau of Economic Research’s business cycle dating committee, said in an interview. “I would say ‘pretty clear’ is a good description” for whether the economic contraction has ended, he said.
The government on Friday said the economy created a net 162,000 jobs last month, the best showing since March 2007.
Although many people may think of recessions as periods of shrinking gross domestic product -- the measure of the economy’s total output -- that is just one element that goes into the NBER’s calculations.
The latest recession began in December 2007, according to the NBER. The group made that determination in December 2008. (Yes, they take their time coming to a decision.)
The NBER’s official definition of a recession: “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.”
In terms of GDP, the economy contracted in the first quarter of 2008, grew slightly in the second quarter of that year, then shrank for four straight quarters through the second quarter of 2009. Growth resumed in the third quarter of last year.
Jeffrey Frankel, a Harvard University economist and member of the NBER’s business cycle dating committee, told Bloomberg that he believed the end of the recession would be dated to mid-2009. He said he was speaking personally, not for the committee, which could take many more months before coming to a decision on the end date.
If the recession ended in July 2009 it lasted 19 months. That would make it the longest one since the 43-month decline of the Great Depression, from August 1929 to March 1933, according to the NBER’s records.
Of course, an NBER declaration that a new economic expansion has begun won’t mean much to the millions of people who are likely to remain either unemployed or underemployed for a long time to come.
-- Tom Petruno