Number: R40052
Title: What is a Recession and Who Decided When It Started?
Authors: Brian W. Cashell, Specialist in Macroeconomic Policy 
Abstract: The National Bureau of Economic Research (NBER) recently announced that the economy had reached a cyclical peak and that a recession had begun in December 2007. A recession is one of several discrete phases in the overall business cycle. The term may often be used loosely to describe an economy that is slowing down or characterized by weakness in at least one major sector like the housing market. When used by economists, "recession" means a significant decline in overall economic activity that lasts more than a few months. NBER business cycle dating committee is the generally recognized arbiter of the dates of the beginnings and ends of recessions. With all statistics it takes some time to compile the data, which means they are only available after the events they describe. Moreover, because it takes time to discern changes in trends given the usual month-to-month volatility in economic indicators, and because the data are subject to revision, it takes some time before the dating committee can agree that a recession began at a certain date. It can be a year or more after the fact that the dating committee announces the date of the beginning of a recession. Just as it took some time for the business cycle dating committee to determine when the recession began, it is likely to be some time after the fact that they determine when the recession has come to an end.
Pages: 4
Date: December 15, 2008