The recession isn’t over yet

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This morning the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER) released its latest proclamation on the state of the U.S. economy: the recession isn’t over yet. That might sound gloomy, but keep in mind that NBER decision-making on recession end dates is perhaps the most lagging of all the lagging indicators.

Lots of economists think that the recession probably ended sometime last summer, but the NBER—which is the most official voice we have on such matters—is still mulling over the data, unwilling to commit to an end date. Here’s a snippet from the non-profit research organization’s statement:

Although most [economic] indicators have turned up, the committee decided that the determination of the trough date on the basis of current data would be premature. Many indicators are quite preliminary at this time and will be revised in coming months. The committee acts only on the basis of actual indicators and does not rely on forecasts in making its determination of the dates of peaks and troughs in economic activity.

The last time the NBER called an end to recession was July 2003. The determination was that the recession that had started in March 2001 had officially ended in November 2001. In other words, it took 20 months after the end of the recession to make the call. That time delay is fairly typical. The recession that ended in March 1991 wasn’t called until December 1992, 21 months later.

There has been some rumination that the 8 economists charged with making the decision about when the recession ended aren’t making a call because they are worried about the economy again turning south—the much-feared “double dip.” While there is some evidence to believe that’s a concern, there’s a lot more evidence that it’s going to take much more than 9 or 10 months for the NBER to make a decision. This is an organization that likes to take the time to get things right.