The Economy

Unhappy First Birthday, Recession of 2008

May you never turn two. National Bureau of Economic Research shows December 2007 as being the last peak, and thus the beginning of the current down...
Stephen TaubDecember 1, 2008

Some say the current recession is a noisy newborn, even if it arrived in recent months with screams and yelps of pain. But the National Bureau of Economic Research says it is already a churlish one-year-old this month.

The NBER, a private nonprofit research organization dedicated to promoting understanding of the economy, maintains a chronology of the beginning and end dates of U.S. recessions. And its Business Cycle Dating Committee said in a report that December 2007 marked the end of the expansion that began in November 2001, which works out to a 73-month relative spree. Still, that was well short of the previous expansion of the 1990s, which lasted 120 months.

The group defines recession as a significant decline in economic activity spread across the economy, lasting more than a few months, and normally visible in production, employment, real income, and other indicators. One 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.

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Although the financial press often defines recession as two consecutive quarters of decline in real GDP, the NBER noted that most recessions identified by its procedures do consist of two or more quarters of declining real GDP, although that is not always the case. For example, the last recession, in 2001, did not include two consecutive quarters of decline. And as of the date of the committee’s meeting, this economy had not yet experienced two consecutive quarters of decline.

Because a recession is a broad contraction of the economy

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