Monday, December 1, 2008

IT's Officail, We're In A Recession.

By Barbara Hagenbaugh, USA TODAY
WASHINGTON — It's official: The USA is in a recession that started in December 2007.

The committee of economists responsible for determining the dates of business cycles said Monday that they met by conference call on Friday, Nov. 28 and "the committee determined that a peak in economic activity occurred in the U.S. economy in December 2007.

" The peak marks the end of the expansion that began in November 2001 and the beginning of a recession."

WHAT THE ECONOMISTS SAY: Read the press release
PAULSON: U.S. considers other rescue programs

December 2007 is the last month in which U.S. employers added jobs. Since then, businesses have shed workers.
FIND MORE STORIES IN: Massachusetts | University of California | AmerisourceBergen Corp. | Berkeley | Cambridge | July-September | Institute for Supply Management | Conference Board | post-World War II | National Bureau of Economic Research | Martin Feldstein | Norbert Ore | Business Cycle Dating Committee

The responsibility for defining U.S. recessions falls to economists who are members of the Business Cycle Dating Committee at the private, non-profit National Bureau of Economic Ressearch in Cambridge, Mass. The organization has been dating business cycles since 1929 and first formed the all-volunteer committee 30 years ago.

While recessions are often described as two consecutive quarters of decline in economic output, that's not the official definition.

Instead, the panel looks at a multitude of economic data, including gross domestic product, income, employment, industrial production and retail sales. The economy contracted in the July-September quarter at the fastest pace in seven years.

Panel members include Robert Hall of Stanford University, Martin Feldstein and Jeffrey Frankel of Harvard University, Robert Gordon of Northwestern University, James Poterba of MIT, David Romer of the University of California, Berkeley, and Victor Zarnowitz of the Conference Board.

Private economists months ago shifted their focus from whether the economy was in a recession to how long the downturn will last and how deep the slump will be.

As bad news on the economy continues to pour in, those forecasts become more dire.

Monday, the Institute for Supply Management said its gauge of manufacturing activity fell in November to the lowest level in 26 years as measures of orders, production and jobs all fell.

The private group said its index fell to 36.2 last month, from 38.9 in October and 50 a year earlier. November's number was the lowest since May 1982, when the economy was in one of the longest post-World War II recessions.

A reading below 50 indicates contraction in the manufacturing sector; readings above 50 indicatge expansion. The gauge has been below 50 for four months.

"It's going to take a few months for most of these things to find a bottom," says Norbert Ore, who chairs the ISM manufacturing committee.

President Bush, expressing remorse that the global financial crisis has cost jobs and damaged retirement accounts, told ABC's "World News" in an interview that he will support additional federal intervention, if necessary, to ease the recession. The interview will air Monday night.

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