WASHINGTON — The U.S. economy peaked in December 2007 and has been in a recession ever since then, the National Bureau of Economic Research reported yesterday, confirming what the major economic indicators have shown for months.
The NBER’s Business Cycle Dating Committee, officially charged with the responsibility of dating recessions, said the economic expansion that lasted 73 months from November 2001 through December 2007. The committee analyzes four indicators to determine a recession: monthly payroll data, real personal income less transfer payments, real business sales, and industrial production. All four indicators peaked between November 2007 and June 2008, the committee said.
Monthly non-farm payroll figures began declining in January and slid every month this year as the economy shed 1.2 million jobs this year. Declining employment payrolls contributed to the December peak even as gross domestic product grew in the first two quarters of the year. Employment figures for November are scheduled to be released on Friday. Economists estimate businesses shed an additional 300,000 jobs in November, according to a survey of economists polled by Thomson Reuters.
Treasury Secretary Henry Paulson, speaking in Washington yesterday, said that while he has told reporters for months that it is up to the economists to determine if the nation is in a recession, the American people have felt they were in one for some time. He said his efforts to end the economic downturn have focused on stabilizing the financial sector.
“The stresses in the financial system have played a major role in the slowdown in the economy,” Paulson said in response to a question about the NBER release. “One of the most effective things we can do is strengthen the financial system and get credit flowing again.”
Federal Reserve chairman Ben Bernanke, speaking in Texas before the Greater Austin Chamber of Commerce, said the current recession is in no way comparable to the Great Depression. “We can put that out of minds,” he said.
“It is shaping up to be probably the deepest recession since the early ’80s,” Paul Kasriel, director of economic research for the Northern Trust Co. in Chicago, said yesterday in a brief interview. Kasriel wrote in February that the indicators used by the NBER peaked in December. No indicators are currently signaling a bottom or end to the recession, he said, but the substantial government stimulus package that has been proposed will boost consumer spending and could turn around the economy six months from now.
Senate Majority Leader Harry Reid, D-Nev., said in a statement after the NBER release that Congress needs to pass a stimulus package “as soon as possible.”
“Those efforts must include a substantial economic recovery package that creates good-paying jobs here in America, cuts taxes for the middle class, and instills confidence to stabilize a volatile market,” Reid said.
House Speaker Nancy Pelosi, D-Calif., said the report shows the Republicans must drop their opposition to such a package.
