Phwew, ‘glad that’s over

The National Bureau for Economic Research declared that the recession that began with the first quarter of 2008 officially ended June 2009.  The group’s Business Cycle Dating Committee, made up of seven economists, listed below, decided via a Sunday conference call.

The current members of the Business Cycle Dating Committee are: Robert Hall, Stanford University (chair); Martin Feldstein, Harvard University; Jeffrey Frankel, Harvard University; Robert Gordon, Northwestern University; James Poterba, MIT and NBER President; James Stock, Harvard University; and Mark Watson, Princeton University. David Romer, University of California, Berkeley, is on leave from the committee and did not participate in its deliberations.

Here’s the Wordle version of the press release.

And if you want to see the whole, gorey thing, click here.

Quack, quack

The NBER managed to end a lot of bar bets by defining what a duck is.  Check out this selection from the press release.

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.

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.

The first paragraph, in a nutshell, describes the business cycle.  The second paragraph, technically speaking, ends all double-dip bets, since the NBER decreed that the recession is over and that the next one will be its very own.  In short, there can now be no double dip since a double dip technically occurs before a recession ends.

It doesn’t matter what one calls it, though, if we dip back into decline in the next several quarters it may not fit the letter of the law, but it certainly will the spirit of it.


3 Responses to “Phwew, ‘glad that’s over”

  1. Roy says:

    When is the other shoe going to fall?

  2. That’s the big question, of course. It sounds like, from what’s gone on in the derivatives world–looking at big trades and anedotally–that most are expecting the other shoe to drop and in a big way. I’m guessing a survey of investors and others would show a huge majority expect that to happen–something really bad, a black swan event. I don’t mean to downplay that possibility, but when so many people are looking for an event to happen–well, historically, we’re just not that smart–not so smart that a majority has looked for the same outcome and has turned out to be right.

Leave a Reply