The Official Recession
The news, of course, is that we are officially in a recession. Oh, and the major market indices dropped around 8% yesterday.
The recession should come as no surprise - we’ve been talking about this for months now. But a little known board, the National Bureau of Economic Research, is officially in charge of calling a recession - and they’ve been silent up till this point. The main reason for the silence has not been any doubt that we’re in a recession - this has become abundantly clear - but rather when the recession started. This is much more difficult to gauge.
We’ve already been in a recession for nearly a year.
Because a recession is a broad contraction of the economy, not confined to one sector, the committee emphasizes economy-wide measures of economic activity. The committee believes that domestic production and employment are the primary conceptual measures of economic activity.
The committee views the payroll employment measure, which is based on a large survey of employers, as the most reliable comprehensive estimate of employment. This series reached a peak in December 2007 and has declined every month since then.
As the average recession lasts around 16-17 months, at first glance this could be good news - it means by mid-2009 we should be climbing out of this recession and back onto a path of growth. Unfortunately, this does not look like a normal recession.
