NBER Says Premature to Declare End of U.S. Recession (Update2)
By Timothy R. Homan
April 12 (Bloomberg) -- The committee responsible for determining when U.S. recessions begin and end said it’s “premature” to declare an end to the current slump, which it reaffirmed began in December 2007.
“Although most indicators have turned up, the committee decided that the determination of the trough date on the basis of current data would be premature,” the Business Cycle Dating Committee of the National Bureau of Economic Research said in a statement on its Web site today.
While a recession is conventionally defined as two quarters of successive contraction in gross domestic product, the private committee doesn’t rely exclusively on GDP to make a recession call. Its members focus on month-to-month changes in the economy.
The NBER committee defines a recession as a “significant” decrease in economic activity over a sustained period of time. The decline would be visible in GDP, payrolls, industrial production, sales and incomes.
“There are reasons to think that national income may contain as much or even more information than GDP, so we have been paying a lot of attention to national income,” said Jeffrey Frankel, a Harvard University professor who sits on the NBER’s eight-member panel.
Payrolls increased by 162,000 in March, the third gain in five months, according to figures from the Labor Department. Industrial production rose 0.1 percent in February, the eighth consecutive monthly increase, according to March 15 figures from the Federal Reserve.
Fourth-Quarter Growth
U.S. GDP expanded at a 5.6 percent annual rate in the last three months of 2009, the second consecutive quarter of growth, data from the Commerce Department showed in March. Incomes declined in January and February after three months of gains, while sales increased during the four months through December, the most recent period of data from the Commerce Department.
Robert Hall, a Stanford University professor who heads the committee, said this month it is “pretty clear” the U.S. recession has ended. Frankel has said the most likely date for the recession’s end would be midyear of 2009.
Not all committee members share those views. Martin Feldstein, a Harvard University professor, said in a March 23 interview with Bloomberg Television that the U.S. faces a “significant” risk of a double-dip recession.
No ‘Deep Split’
“There isn’t any deep split” on the committee, Frankel said today. “The difference is just probabilities” in terms of whether another downturn is possible, he said.
The committee last met on April 8, Frankel said. Panel member David Romer, husband of White House chief economist Christina Romer, is on leave from the committee and did not participate in last week’s discussion, said Donna Zerwitz, an NBER spokeswoman.
“This time they are being a little more cautious,” said Chris Low, chief economist at FTN Financial in New York. “I suspect that is because it was such a severe recession and there is limited access to credit still, which means incomes will be more important to consumers than it was in the last couple of cycles.”
The last time the U.S. was in a recession was from March through November 2001, according to NBER. The longest economic slumps since 1945 were the 16-month downturns that ended in March 1975 and November 1982. The Great Depression lasted 43 months, from August 1929 to March 1933.
No comments:
Post a Comment