US National Bureau of Economic Research announced that US has been in recession since December 2007.
NBER noted that the previous peak occurred in November 2007. Comments from the press dismissed it as an obvious hindsight, though I don't recall the same pessimism during the same period of last year (blogs in 2007/11, 2008/01, and 2008/05). The beginning of a recession is not so evident as it just comes down from the peak. The level of economic activities are still as vibrant as the peak. By the same token, people would not notice the start of a recovery when the economy is not far away from the trough. The academic definition is arguably differnt from the common wisdom. The NBER identifies the turn of events, from peak to trough or from trough to peak. We, the non-researchers, recognize the top half and the bottom half of the waves.
Real GDP growth of the past four quarters
One interesting thing to note is that the GDP number actually increased in the first half of 2008 (in real GDP growth, numbers from US Bureau of Economic Analysis). As NBER changed its definition of recession from the old "measure of a period of negative, real GDP growth", the statistics from past recessions may not be a perfect indicator. Nevertheless, in the twentieth century there were four recessions lasted longer than 23 months, and one of the four lasted 43 months. As we have been in a recession for 12 months now, let's hope we will see the recovery soon in 2009.
NBER noted that the previous peak occurred in November 2007. Comments from the press dismissed it as an obvious hindsight, though I don't recall the same pessimism during the same period of last year (blogs in 2007/11, 2008/01, and 2008/05). The beginning of a recession is not so evident as it just comes down from the peak. The level of economic activities are still as vibrant as the peak. By the same token, people would not notice the start of a recovery when the economy is not far away from the trough. The academic definition is arguably differnt from the common wisdom. The NBER identifies the turn of events, from peak to trough or from trough to peak. We, the non-researchers, recognize the top half and the bottom half of the waves.
Real GDP growth of the past four quarters
- 2007 4th quarter : -0.2%
- 2008 1st quarter : +0.9%
- 2008 2nd quarter : +2.8%
- 2008 3rd quarter : -0.5% (est.)
One interesting thing to note is that the GDP number actually increased in the first half of 2008 (in real GDP growth, numbers from US Bureau of Economic Analysis). As NBER changed its definition of recession from the old "measure of a period of negative, real GDP growth", the statistics from past recessions may not be a perfect indicator. Nevertheless, in the twentieth century there were four recessions lasted longer than 23 months, and one of the four lasted 43 months. As we have been in a recession for 12 months now, let's hope we will see the recovery soon in 2009.
