Monday, December 01, 2008
NBER Finally 'Fesses Up
The U.S. economy entered a recession a year ago this month, the panel that dates American business expansions said today.Yep, last December.
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.
A cute quote:
“It is clearly not going to end in a few months,” Jeffrey Frankel, a member of the group and a professor at Harvard University, said in an interview. “We would be lucky to get done with it in the middle of next year.”That now appears impossible, not because of what is happening in the US but because of what is happening in ROW.
In terms of just the US economy, the consumer wave is such that the economy is going to want to get up off its deathbed around May of 2009 as long as oil doesn't go back over $55-57 a barrel and no one fools around with all these fancy energy programs. Half the households in the US are getting a real raise due to the drop in energy costs, and it's a hefty one, averaging probably $20 a week, or $1,000 a year, but the median is more like $28. Of the half of households that aren't getting a hefty stimulus, at least 60% are getting some, and will get more as prices drop on other things due to the economic downturn.
But the dominoes are falling in the rest of the world, which will keep draining oomph out of the US.
But back to the definition of a recession: the popular definition is two or more consecutive quarters of negative growth. The economic definition is an extended and broad downturn in an economy that shows up in GDP, and recessions are dated from the end of the economic peak to the bottom of the downturn. Actually NBER is dating the onset late.