Common-wisdom definitions of what constitutes a recession aside, the National Bureau of Economic Research Inc. today confirmed what most Americans have been feeling for many months: The United States economy has been in a recession for a year.
Economic activity peaked in December 2007 and has been on the decline since, ending a 73-month period of economic expansion that began in November 2001, according to the Cambridge, Mass.-based committee of leading economists, which is responsible for dating the start and finish of economic downturns.
The usual indicator of a recession is two consecutive quarters of negative economic growth as measured by a country's gross domestic product.
NBER however defines a recession as a “significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators.”
The economy lost 240,000 jobs in October, as the unemployment rate rose to 6.5%, a 14-year high.
Economists are expecting a loss of another 325,000 jobs in November.
The economy has been shedding jobs since January, while declines in manufacturing, retail sales and industrial production “met the standard for a recession,” the committee said in a statement.
"Many of these indicators, including monthly data on the largest component of GDP, consumption, have declined sharply in recent months … A recession begins when the economy reaches a peak of activity and ends when the economy reaches its trough," NBER said in a statement.
"I am surprised that the recession was called in December 2007," said Jerry Webman, a senior investment officer and chief economist for OppenheimerFunds Inc. in New York.
He would have called the recession in the middle of the year.
"But NBER makes a convincing case," he said.
"Considering that everything except for the gross domestic product has been on the decline since December, the mistake that most of us have made was to look at GDP first and it is the one indicator that has been anomalous," he added.