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  • NBER Marks End of Recession

    Don't forget to mark your calendar. Last year's calendar, that is. The National Bureau of Economic Research officially pinpointed the end of the recession: June 2009. The NBER's Business Cycle Dating Committee met over the weekend, and set the length of the recession at 18 months--the longest recession since World War II according to the NBER's measures. From the report: The committee concluded that the choice of June 2009 as the trough month for economic activity was consistent with the later trough months in the labor-market indicators-aggregate hours and employment-for two reasons. First, the strong growth of quarterly real GDP and real GDI in the fourth quarter was inconsistent with designating any month in the fourth quarter as the trough month. The committee believes that these quarterly measures of the real volume of output across the entire economy are the most reliable measures of economic activity. Second, in previous business cycles, aggregate hours and employment have frequently reached their troughs later than the NBER's trough date. In particular, in 2001-03, the trough in payroll employment occurred 21 months after the NBER trough date. In 2009, the NBER trough date is 6 months before the trough in payroll employment. In both the 2001-03 and 2009 cycles, household employment also reached its trough later than the NBER trough date. The committee noted the contrast between the June trough date for the majority of the monthly indicators and the October trough date for real personal income less transfers. There were two reasons for selecting the earlier date. The first was described above -- the fact that quarterly real GDP and GDI rose strongly in the fourth quarter. The second was that real GDI is a more comprehensive measure of income than real personal income less transfers, as it includes additional sources of income such as undistributed corporate profits. The committee's use of income-side measures, notably real GDI, is based on the accounting principle that the value of output equals the sum of the incomes that arise from producing the output. Apart from a random statistical discrepancy, real GDI satisfies that equality while real personal income does not. This means that any downturn after June 2009 would mark the start of a new recession. Read the NBER release, and get access to an Excel spreadsheet with the relevant data here .

  • NBER Member Jeff Frankel: 'The recession is over'

    Jeff Frankel , professor at Harvard's Kennedy School of Government, says the "recession is over:" True, the magnitude of job loss after December 2007 was unparalleled since the 1930s. It was severe even relative to the loss of GDP. But contrary to some impressions, the labor market in this recovery has not lagged unusually far behind the rest of the economy. It always lags behind somewhat: due to costs of search, hiring and training, firms wait until the recovery is reasonably well established before adding workers to the payroll. But by either of two criteria, the lag has not been unusually long this time. First, the three months of greatest job loss virtually coincided with the three months of greatest output loss, centered on January or February of 2009, as had also been the the case in the 1991 and 2001 recessions. ( See graphs at Frankel's blog .) By June 2009 , job market indicators were showing their first signs of life. Second, with the latest figures, employment changes have now turned positive. This is the more definitive criterion, because a recovery is defined as a period of increasing economic activity, not a period when economic activity is high. The nine month wait was painful. But the lag between positive income growth (June 2009) and positive job growth (March 2010) turned out to be shorter than in the preceding two recessions (one to two years). Read Job Market Confirms End of Recession here . Mark Thoma , professor of economics at the University of Oregon, writes that we should pay attention to Frankel, since he is a member of the National Bureau of Economic Research's Business Cycle Dating Committee--which means he is part of the group that defines the dates of recessions. But Thoma is not so sure the latest jobs report is "encouraging" enough. Read Thoma's post here .

  • Mark Thoma on Recovery Watch

    Mark Thoma writes that he will know the economy has turned a corner when the private sector is "the primary driver of new economic activity." And he has certian things he's watching for, among them: First, though not necessarily foremost, that banks are being recapitalized with private sector funds, and that this is happening without the aid of government guarantees or other such programs that encourage capital infusions (which is hard to determine while the government programs are in place). Second, I will want to see private sector non-residential investment improving, another sign that private sector funds are moving back into circulation. Presently, this hasn't even started heading back upward, though there are signs the decline is slowing: Read How Will We Know when the Economy Turns the Corner ? here . And weigh in. What are you watching for?

  • WSJ May Economists Forecast: End of Recession Sooner, Recovery Long and Slow

    Economists in the Wall Street Journal 's monthly forecasting survey seem to be growing a bit more optimistic--and on average they predict the recession to end in August. This is a month sooner than the April forecast . The survey was conducted before last week's reports of dropping retail sales and increased unemployment claims. But the economists were already anticipating Americans to consume less and save more, and, as Journal's Phil Izzo writes, that is why they project a slow recovery: A consumer retrenchment is one factor that is likely to make any recovery a long slog. The economists on average expect the unemployment rate to climb to 9.7% by the end of the year, with two million more jobs lost over the next 12 months, even as growth returns to the economy. The depth of the downturn means it will take years to eat up the slack created by the recession. Nearly half of the economists said it will take three to four years to close the output gap, while more than a quarter say it will take five to six years. Here's a look at the GDP projections for the forecast, in context ( click here for an interactive version of the graph ): The survey shows generally postive reactions from economists to the actions taken by the Obama administration, and storng support for Fed Chair Ben Bernanke in particular. Phil Izzo and Kelly Evans discuss the May forecast in this video: For the full May forecast, click here .

  • Richard Clarida: 'US Will Not Be Leading Global Growth'

    Richard Clarida was Assistant Treasury Secretary during the George W. Bush Administration. Now he is a professor of economics at Columbia University , and strategic advisor for the global investment management firm PIMCO . Clarida says, while there have been some good signs in the economy of late, any talk of an end to the recession is premature. In this interview with Bloomberg, he stresses that recovery is gloing to be slow, and Americans need to "get used to a world where the US is the caboose on global growth, not the engine":