Thursday, September 23, 2010

Great Recession Officially Over

So says the Business Cycle Dating Committee of the National Bureau of Economic Research.  In an announcement last Monday, BCDC determined that the recession began in December 2007 and ended in June 2009, lasting 18 months -- longer than any recession since the end of World War II.  Labor market indicators (employment, hours worked) did not bottom out until December 2009, but most other measures hit their trough in or around June 2009. 

Why does it take so long to make such a determination?  The simple answer is that the government constantly revises and updates its measures of key economic indicators.  As the official arbiter of the start and end of recessions and growth periods, NBER wants to make sure that it makes the correct call.  Think of it as watching all of the camera angles on instant replay until you are sure you have the right decision.  

The end of the recession does not necessarily translate into the beginning of good times for all.  All it means is that GDP and other measures of aggregate economic activity have stopped declining. 

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