The recession of 2008 is now officially over

It's official, the recession is over. The National Bureau of Economic Research (NBER) Business Cycle Dating Committee (BCDC), the quasi-official arbiter of the dating of recessions has issued their conclusion that the recession ended in June 2009. As the committee says:

The Business Cycle Dating Committee of the National Bureau of Economic Research met yesterday by conference call. At its meeting, the committee determined that a trough in business activity occurred in the U.S. economy in June 2009. The trough marks the end of the recession that began in December 2007 and the beginning of an expansion. The recession lasted 18 months, which makes it the longest of any recession since World War II. Previously the longest postwar recessions were those of 1973-75 and 1981-82, both of which lasted 16 months.

That is consistent with what I had been saying for quite some time, although I phrased it as "as of July 2009", meaning that July was the first full month of improvement. In the committee's terminology, to be strictly correct, we should say that the recovery began in June 2009 even though the economy was not recovering that whole month. And technically the recession began in December 2007, but I refer to it as the "recession of 2008" since that is when the bulk of the decline occurred.

As far as a double dip, the committee says only that:

The committee decided that any future downturn of the economy would be a new recession and not a continuation of the recession that began in December 2007. The basis for this decision was the length and strength of the recovery to date.

That is not to say that the economy won't decline in the near future, just that it would be categorized as a separate recession.

The committee also notes that the economy still has problems on the jobs and unemployment front:

The unemployment rate lags behind the NBER cycle dates as a general matter--it reaches a low point somewhat later than the peak in activity and usually remains at high levels after activity reaches its trough. For example, in the recovery beginning in March 1991, the unemployment rate continued to rise for 15 months after the trough. The lag was 19 months in 2001 to 2003. In the current recovery, the lag was only 4 months, from the trough in activity in June 2009 to the highest point of the unemployment rate in October 2009. But even in September 2010, the unemployment rate remained at high levels, even though these levels were below the maximum reached in October 2009.

It is also worth noting that the "end" of a recession is not to say that everything is back to normal, but simply that the economy has started to recover. As the committee puts it,

In determining that a trough occurred in June 2009, the committee did not conclude that economic conditions since that month have been favorable or that the economy has returned to operating at normal capacity. Rather, the committee determined only that the recession ended and a recovery began in that month. A recession is a period of falling economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. The trough marks the end of the declining phase and the start of the rising phase of the business cycle. Economic activity is typically below normal in the early stages of an expansion, and it sometimes remains so well into the expansion.

As a final note, NBER is not a government agency. They are a private organization, essentially a cooperative of economists. They bill themselves as "a private, nonprofit, nonpartisan research organization dedicated to promoting a greater understanding of how the economy works." Everybody, including federal agencies, Congress, and the Federal Reserve, accepts and uses the NBER recession dates as gospel, so they are "official" in that sense, I refer to them as quasi-official since they are not from the federal government in the way that GDP, employment, income, and production numbers are.

-- Jack Krupansky