Dr. Kalpana C Satija
The federal Government is the official source of information about unemployment, inflation, and thousands of other economic indicators. The informal definition of a recession is two consecutive quarters of negative economic growth. However, it is common practice to leave the determination of a recession to a committee of economists at the National Bureau of Economic Research (NBER), a private organization of academic economists.
Whether or not there is a 'recession' in 2008 will depend both on actual economic activity and on the subjective judgments of the National Bureau of Economic Research.
One might infer that the U.S. economy was expanding consistently before March 2001 and then contracting consistently until November 2001. But economic data from the federal Government’s Bureau of Economic Analysis reveal a much different picture. The economy contracted in the third quarter of 2000, the first quarter of 2001, and again in the third quarter of 2001. But it expanded in the fourth quarter of 2000 and the second quarter of 2001. In other words, there was choppy economic performance throughout both years. If one defines a recession as two consecutive quarters of negative growth, then no recession occurred.
So will there be a recession in 2008? The NBER usually waits several months before designating a recession. So if a recession were to begin in January 2008, the NBER might not announce it until the summer or fall. If a recession began next summer, it might not be identified as such until early 2009.
1The most precise measure of change—the Office of Federal Housing Enterprise Oversight (OFHEO) index comparing sales prices of the same houses over time—declined by 0.4 percent in the third quarter of 2007, the first quarterly decline in 13 years. Yet prices were still 1.8 percent higher than they were a year ago. Although Calomiris... [continues]
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