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Recessions Arbiters, Wary of Certifying an Upturn
On Sunday April 11, 2010, 9:00 pm EDT
For the record, this recession isnt over yet.
A committee of economists, charged with determining the official turning points in the nations business cycles, certifies the beginnings and ends of recessions. But this time, the committee members say, the evidence is not so easy to decipher.
The committee plans to announce on Monday that it cannot yet declare an end to the recession that began in December 2007, several members indicated on Sunday. Such an acknowledgment is rare in the history of setting dates to business cycles and could affect the behavior of investors and consumers.
Despite a recent uptick in employment and income, the decision of the committee at a meeting on Friday reflects a lingering worry that the economy could turn downward again in a so-called double-dip recession.
Several economists on the committee, which has seven active members, said they considered such a turn to be unlikely. But, they said, the duration and severity of the contraction have made it hard to determine with authority that a recovery has begun.
The gross domestic product, the broadest measure of economic activity, officially began rising in the second half of 2009, suggesting that a recovery might have been quietly under way. But the committee takes other factors into consideration, like employment trends and consumer confidence.
Ben S. Bernanke, the Federal Reserve chairman, and Christina D. Romer, the chairwoman of the White House Council of Economic Advisers, are former members of the committee, and its position could potentially affect their outlook on monetary and fiscal policy. Ms. Romers husband, David Romer, is now on the committee.
The two previous recessions, in 1990-91 and in 2001, each lasted eight months and were mild enough that the committee felt confident in pronouncing them over in a year or less. As it was, the current recession was 11 months old before the committee announced its start date.
Now, the committee, which is part of the National Bureau of Economic Research, a nonprofit group, says that the timing of an upward turn has been harder to discern than in the past. Moreover, the government has revised several statistics after they were initially released, making it more difficult to say when the economy hit bottom.
Hypothetically, if there were a new sharp downturn that came along tomorrow, would it count as a new recession or part of the same recession? asked Jeffrey A. Frankel, a member of the panel, officially known as the Business Cycle Dating Committee. In the latter case, we would have made a mistake by calling the trough last year and saying the recession was over.
Recessions Arbiters, Wary of Certifying an Upturn - Yahoo! Finance
On Sunday April 11, 2010, 9:00 pm EDT
For the record, this recession isnt over yet.
A committee of economists, charged with determining the official turning points in the nations business cycles, certifies the beginnings and ends of recessions. But this time, the committee members say, the evidence is not so easy to decipher.
The committee plans to announce on Monday that it cannot yet declare an end to the recession that began in December 2007, several members indicated on Sunday. Such an acknowledgment is rare in the history of setting dates to business cycles and could affect the behavior of investors and consumers.
Despite a recent uptick in employment and income, the decision of the committee at a meeting on Friday reflects a lingering worry that the economy could turn downward again in a so-called double-dip recession.
Several economists on the committee, which has seven active members, said they considered such a turn to be unlikely. But, they said, the duration and severity of the contraction have made it hard to determine with authority that a recovery has begun.
The gross domestic product, the broadest measure of economic activity, officially began rising in the second half of 2009, suggesting that a recovery might have been quietly under way. But the committee takes other factors into consideration, like employment trends and consumer confidence.
Ben S. Bernanke, the Federal Reserve chairman, and Christina D. Romer, the chairwoman of the White House Council of Economic Advisers, are former members of the committee, and its position could potentially affect their outlook on monetary and fiscal policy. Ms. Romers husband, David Romer, is now on the committee.
The two previous recessions, in 1990-91 and in 2001, each lasted eight months and were mild enough that the committee felt confident in pronouncing them over in a year or less. As it was, the current recession was 11 months old before the committee announced its start date.
Now, the committee, which is part of the National Bureau of Economic Research, a nonprofit group, says that the timing of an upward turn has been harder to discern than in the past. Moreover, the government has revised several statistics after they were initially released, making it more difficult to say when the economy hit bottom.
Hypothetically, if there were a new sharp downturn that came along tomorrow, would it count as a new recession or part of the same recession? asked Jeffrey A. Frankel, a member of the panel, officially known as the Business Cycle Dating Committee. In the latter case, we would have made a mistake by calling the trough last year and saying the recession was over.
Recessions Arbiters, Wary of Certifying an Upturn - Yahoo! Finance
