The U.S. economy has been in recession since December 2007, the National Bureau of Economic Research announced on Monday.
The result comes despite the economy not having suffered the two consecutive quarters of negative growth usually needed to characterize an economy as recessionary. The only negative reads on GDP in the US were in Q4 2007, when the economy fell 0.2%, while in Q3 2008 preliminary estimates suggest a 0.5% contraction.
"Because a recession is a broad contraction of the economy, not confined to one sector, the committee emphasizes economy-wide measures of economic activity. The committee believes that domestic production and employment are the primary conceptual measures of economic activity," explained the report.
"The committee views the payroll employment measure, which is based on a large survey of employers, as the most reliable comprehensive estimate of employment. This series reached a peak in December 2007 and has declined every month since then."
The NBER maintains that the discrepancy between GDP growth and a decline in U.S. employment is a due to a statistical discrepancy and that after December 2007, the declines justify the definition of a recession.
On the basis of real personal incomes excluding transfers, the report also suggests a peaking economy in December 2007, while retail manufacturing and wholesale trade suggested a peak in June 2008. The NBER furthermore states that since January 2008, industrial production has fallen 4.8%.
And indeed, conditions are not expected to improve any time soon with the Bureau of Labour Statistics expected to report a 325k decline in nonfarm payrolls and a 0.3% gain in the unemployment rate to 6.8% for November. The U.S. nonfarm payrolls report will be released on Dec. 5.
By Erik Kevin Franco and edited by Stephen Huebl
©CEP News Ltd. 2008