There’s been a lot of speculation from various commentators and guests on the cable TV talk-fests recently about the U.S. being in a recession. Some have suggested that the economy has been teetering on the brink of a depression. The Business Cycle Dating Committee of the National Bureau of Economic Research yesterday came out with its definitive assessment: the U.S. is in a recession.
The committee determined that a peak in monthly economic activity occurred in the U.S. economy in February 2020. The way the NBER does its analysis, that peak marks the end of the expansion that began in June 2009 and the beginning of a recession.
The expansion lasted 128 months, which was the longest in the history of U.S. business cycles dating back to 1854. The previous record was held by the business expansion that lasted for 120 months from March 1991 to March 2001, according to NBER.
The committee also determined that a peak in quarterly economic activity occurred in the fourth quarter of 2019.
NBER defines a recession as a significant decline in economic activity spread across the economy, normally visible in production, employment, and other indicators. A recession begins when the economy reaches a peak of economic activity and ends when the economy reaches its trough. What happens on the other side, as the economy moves between a trough and a peak, is an economic expansion.
Committee members participating in the decision included economists and economics professors: Robert Hall, Stanford University; Robert Gordon, Northwestern University; James Poterba, MIT and NBER president; Valerie Ramey, University of California, San Diego; Christina Romer, University of California, Berkeley; David Romer, University of California, Berkeley; James Stock, Harvard University; and Mark Watson, Princeton University.
The committee recognized that this survey was affected by special circumstances associated with the pandemic that was growing around the world in early 2020. The committee said it recognizes that the pandemic and the public health response have resulted in a downturn with different characteristics and dynamics than prior recessions.
NBER is a private, nonprofit, nonpartisan organization founded in 1920 that is dedicated to conducting economic research and sharing its findings with academics, business professionals and makers of public policy. It is headquartered in Cambridge, Massachusetts, and has an office in New York City.