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Recession not over yet: NBER
by Neha Gupta - April 13, 2010 - comments
However, NBER depends on the month-to-month economic variations to declare the recession stages as the committee believes that actual recession is significant over a sustained period of time.
The recession may not be over yet, reveals a panel of 7 economists from the National Bureau of Economic Research (NBER), a body that confirms the inception and the end of U.S trade cycles.
The panel is of view that in spite of several positive indicators, it is too early to mark the end of the U.S recession as many of the indicators are in their unstable stage.
“Although most indicators have turned up, the committee decided that the determination of the trough date on the basis of current data would be premature,” said the Business Cycle Dating Committee of the National Bureau of Economic Research in a statement on its website Monday.
There was a 162,000 increase in the payrolls in March. It is the third successive gain witnessed in five months, according to figures from the Labor Department
Moreover an increase of 0.1 percent, the eighth consecutive monthly increase, was found in the industrial production, according to March 15 figures from the Federal Reserve.
Committee depends on month-to-month variations
Generally, two quarters of continuous contraction in the nation’s GDP is termed as recession.
However, NBER depends on the month-to-month economic variations to declare the recession stages as the committee believes that actual recession is significant over a sustained period of time.
Though some members believe that the recession is over, the panel is awaiting a consensus in order to reach a final decision.
During recession, significant decrease is witnessed in GDP, payrolls, sales, industrial production and incomes, claim researchers.
“There are reasons to think that national income may contain as much or even more information than GDP, so we have been paying a lot of attention to national income,” said Jeffrey Frankel, a Harvard University professor, who sits on the Business Cycle Dating Committee's eight-member panel.
Members lack consensus on recession
The committee differs on the probabilities of whether the nation could face a downturn, resulting in the revival of recession.
Though some members believe that the recession is over, the panel is awaiting a consensus in order to reach a final decision.
“There isn't any deep split” on the committee, Mr. Frankel said today. “The difference is just probabilities” in terms of whether another downturn is possible, he said.
NBER had previously declared the start of the recession in December 2007.
Recession dates are announced by the committee at least a year after the actual turning point.