The National Bureau of Economic Research (NBER) is widely recognized as the arbiter of starting and ending dates of U.S. recessions. In its website page listing recessions and expansions back through the 1850s, the NBER defines a recession as “…a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.” A sizeable majority of the Bureau’s Business Cycle Dating Committee is not yet confident the recession that began at the end of 2007 has ended.
I am inclined to agree with Robert Gordon and Jeffrey Frankel that the recession probably ended sometime in the second half of 2009. However, the NBER committee’s caution in declaring an end to the recession is understandable. If businesses were confident we are in the midst of an expansion, they would clearly signal this fact with strong and sustained increases in payroll employment. We have not seen such increases yet. As of mid-April, the payroll statistics showed noticeable payroll gains in only one of the previous four months. Since November 2009 private employers have added just 0.06% to their payrolls. New claims for unemployment insurance continue to exceed 450,000 a week. While these statistics will certainly be revised, the revisions may indicate a weaker rather than a stronger labor market.
Currently available statistics on income, output, and consumption indicate the economy has begun to grow again. There is a risk, however, that the rebound is temporary. I think this risk is small, but I am a labor economist and public finance specialist not a macroeconomist. The NBER’s Business Cycle Dating Committee contains some of the nation’s most eminent economic statisticians and macroeconomists. It is hard to think of a more trustworthy panel of experts to make the final determination of when the Great Recession ended.