NBER Not Really Sure if Recession Is Over

by: Karl Denninger

Well, at least someone's awake....

The committee of academic economists that dates the beginning and end of recessions said it isn't ready to put an end date on the recession that started in December 2007.

I'll go ahead and say it - there has been no end to anything.

"Recession" is defined as "a significant decline in economic activity spread across the economy."

Ok. Is this a "significant decline"?

Just curious, of course....

Note that the so-called "recession" in 2001 coincided exactly with the fall from the peak in the real (government-adjusted) GDP in 2001; NBER says that recession began in March of 2001. They also claim it technically ended in November of that year. I'd dispute that, but the additional decline was very small, being only a fraction of 1%, bottoming around the end of 2002. So while I'd say they called it over before it was, we're quibbling over a small fraction of a percent, which is more of a technical disagreement than one of merit in the economy.

This much is certain however - the economy was absolutely on the mend in 2003. It was a very weak recovery, but a recovery nonetheless.

Note, however, that REAL GDP growth never exceeded 2% all the way up until we crashed. Also note that NBER says the current recession began in December 2007. Close enough, by my figures (and due to the nutty monthly variation in Treasury activity, it is pretty much worthless to try to get granularity better than annual in my figures. Such is reality when dealing with a jumpy and heavily-seasonal data set.)

But has there been an actual improvement in real GDP thus far in this alleged "recovery"? Note that "turning up" of that line (which hasn't happened either) isn't an increase - it is merely an improvement in the rate of deterioration. For GDP to actually be growing real GDP must cross over the 0% line, and it's a hell a long way from there.

I have no idea if the NBER uses government-adjusted GDP numbers, but they damn well ought to, since their intent is to measure actual private business activity - not government "pumpfest" games.