U.S. economy entered recession in February, business cycle arbiter says

[alp227]

Source: Reuters

The U.S. economy ended its longest expansion in history in February and entered recession as a result of the coronavirus pandemic, the private economics research group that acts as the arbiter for determining U.S. business cycles said on Monday.

The Business Cycle Dating Committee of the National Bureau of Economic Research said in a statement that members “concluded that the unprecedented magnitude of the decline in employment and production, and its broad reach across the entire economy, warrants the designation of this episode as a recession, even if it turns out to be briefer than earlier contractions.”

The designation was expected, but notable for its speed, a mere four months after the recession began. The committee has typically waited longer in order to be sure. When the economy started declining in late 2007, for example, the committee did not pinpoint the start of the recession until a year later.

But the depth and speed of this collapse left little doubt.

Read more: https://www.reuters.com/article/us-usa-economy-recession/u-s-economy-entered-recession-in-february-business-cycle-arbiter-says-idUSKBN23F28L

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NBER's official report: Determination of the February 2020 Peak in US Economic Activity

The Business Cycle Dating Committee of the National Bureau of Economic Research maintains a chronology of the peaks and troughs of U.S. business cycles. The committee has determined that a peak in monthly economic activity occurred in the U.S. economy in February 2020. The peak marks the end of the expansion that began in June 2009 and the beginning of a recession. The expansion lasted 128 months, the longest in the history of U.S. business cycles dating back to 1854. The previous record was held by the business expansion that lasted for 120 months from March 1991 to March 2001.

The committee also determined that a peak in quarterly economic activity occurred in 2019Q4. Note that the monthly peak (February 2020) occurred in a different quarter (2020Q1) than the quarterly peak. The committee determined these peak dates in accord with its long-standing policy of identifying the months and quarters of peak activity separately, without requiring that the monthly peak lie in the same quarter as the quarterly peak. Further comments on the difference between the quarterly and monthly dates are provided below.

A recession is a significant decline in economic activity spread across the economy, normally visible in production, employment, and other indicators. A recession begins when the economy reaches a peak of economic activity and ends when the economy reaches its trough. Between trough and peak, the economy is in an expansion.

Because a recession is a broad contraction of the economy, not confined to one sector, the committee emphasizes economy-wide indicators of economic activity. The committee believes that domestic production and employment are the primary conceptual measures of economic activity.

[BumRushDaShow]

1. Was just about to post this

U.S. economy officially entered a recession in February.

The United States officially entered a recession in February 2020, the committee that calls downturns announced on Monday, marking the formal beginning of the first economic downturn since the 2007 to 2009 slump. The National Bureau of Economic Research said that the economy hit its peak in February and has since fallen into a downturn, as pandemic-related shutdowns tanked activity and brought an end to a record-long expansion — one that had lasted 128 months.

While analysts often refer to recessions as two consecutive quarters of contraction, in the United States the N.B.E.R. formally determines when they begin and end based on a range of factors, most importantly domestic production and employment. Most economists expect that this recession will be both deep and short, with the economy rebounding as state economies reopen and the world figures out how to function amid the coronavirus pandemic.

“The unprecedented magnitude of the decline in employment and production, and its broad reach across the entire economy, warrants the designation of this episode as a recession, even if it turns out to be briefer than earlier contractions,” the N.B.E.R. explained in a statement.

Globally, “this is almost certainly the deepest recession” since at least the Second World War, Jan Hatzius, Goldman Sachs chief economist, wrote in a note on Monday. But it is also probably the shortest: He noted that the NBER database shows no other recession that has lasted less than 6 months in records dating back to the mid-1800’s.

https://www.nytimes.com/2020/06/08/business/stock-market-today-coronavirus.html?smid=tw-nytimes&smtyp=cur#link-72764953

WaPo also just had a breaking (they have it buried in another article).

[murielm99]

2. I don't understand how they figure this

will be short. You know that some jobs and businesses will never come back. I know I have seen the last of many small businesses in my area. Where will these people find work?

[sandensea]

3. They'll just concoct numbers to show things "are back to normal"

As long as Orange Amin is in office, anyway.

I hope and trust Biden will have all 2020 economic data reviewed - and if necessary, revised to show a more accurate picture.

We already know the BLS (headed by a Heritage Foundation lackey) BS'd the April and May unemployment data - the tip of the iceberg no doubt.

[BumRushDaShow]

4. Well...

there's a "technical" definition for a "recession" and that is 2 consecutive "negative" (GDP) quarters (so 6 months). They are probably assuming that if they can somehow go full speed ahead over the summer and fall, then they can maybe squeak one of the next quarters out of the "negative" and that would "technically" mark the "end" of the recession... until such time if/when another 2 consecutive quarters go negative again, signaling another recession.

Of course we both know that there is a huge segment that will take years to recover or never recover and they don't seem to want to invest in growth to work around the coronavirus factor.

[progree]

5. The 2 consecutive negative quarters is a widespread definition of recession, but not a "technical"

or formal one. At least from what I've read.

The NBER is the ultimate arbiter, and I've never heard that they require 2 consecutive negative GDP quarters. Nor does a positive quarter automatically end the recession. They also look at a lot of other economic indicators.

About the NBER determination of recessions and expansions --
http://www.democraticunderground.com/111622439#post3

[BumRushDaShow]

6. Well I use the term "technical"

to differentiate from those who look solely at the UE and declare a "recession".

[cstanleytech]

7. Another Republican Recession.................joy.

[LymphocyteLover]

8. seriously-- I knew this had to be coming

that tax cut was such a massive scam

[cstanleytech]

9. Of course it was a scam yet there are still many morons cheering about getting crumbs from the pie

while the 1% make off with about 98% of it and the middle class divide the small slice they were given.

[Yavin4]

12. I've paid more in taxes than I have ever have.

And no, my income didn't go up in the past 4 years.

[tclambert]

10. How do they define depression?

The 2nd quarter numbers will be brutal.

[Yo_Mama_Been_Loggin]

11. So much winning!!!!!!

[Steelrolled]

14. This recession is so much different from any before

I don't know how much the rules really matter. And it is anyone's guess as to how the recovery will play out.

There are claims of jobs that "will never come back" but to me that is meaningless. Every day there are jobs that end and will never come back, and every day there are jobs that start that never existed before. The economy will certainly change over the time span of the pandemic - the question is when will it will exceed the pre-corvid-19 economy.