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The National Bureau of Economic Research has declared that the 2007 recession ended in June 2009. It's not unusual for the NBER to delay its announcements of the beginnings and ends of recessions until data in this regard are clear. It waited until November 2001 to announce that the last recession started in March 2001. It waited until July 2003 to announce that that recession had ended in November 2001. It waited until December 2008 to announce that the most recent recession got started in December 2007.

At its previous meeting in April, the NBER's Business Cycle Dating Committee wasn't yet ready to take that step although many economists and other analysts, including more than one here, have for more than year suggested that the summer of 2009 would eventually be chosen.

In determining that a trough occurred in June 2009, the committee did not conclude that economic conditions since that month have been favorable or that the economy has returned to operating at normal capacity. Rather, the committee determined only that the recession ended and a recovery began in that month. A recession is a period of falling economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. The trough marks the end of the declining phase and the start of the rising phase of the business cycle. Economic activity is typically below normal in the early stages of an expansion, and it sometimes remains so well into the expansion. ...

The committee concluded that the choice of June 2009 as the trough month for economic activity was consistent with the later trough months in the labor-market indicators—aggregate hours and employment—for two reasons. First, the strong growth of quarterly real GDP and real GDI in the fourth quarter was inconsistent with designating any month in the fourth quarter as the trough month. The committee believes that these quarterly measures of the real volume of output across the entire economy are the most reliable measures of economic activity. Second, in previous business cycles, aggregate hours and employment have frequently reached their troughs later than the NBER’s trough date. In particular, in 2001-03, the trough in payroll employment occurred 21 months after the NBER trough date. In 2009, the NBER trough date is 6 months before the trough in payroll employment. In both the 2001-03 and 2009 cycles, household employment also reached its trough later than the NBER trough date.

As the dating committee makes clear, while the measures it uses to determine the end of a recession have met the criteria for dating the end of the 2007 recession, the pain of that recession may be far from over. Gauges of improving economic health are decidedly mixed at the moment. While most are in an upward trend and have been for months or all the way back to June 2009, the rate of some of that improvement has slackened considerably since the beginning of the year. That's had analysts bouncing all over the place in the past nine months, predicting everything from growth as high at 5 percent to a "double-dip" recession.

Next week, we'll see the second revision for the government's estimate of annualized gross domestic product in the second quarter. The first revision put that number at a weak 1.6 percent, and the newest estimate could see an even lower figure. Many economists have been saying the second half of the year will only see 2 percent or less annualized growth in GDP. If so, that will be bad news for that part of the economy that affects people the most, employment. The still-awful job situation is the part of the economic equation that will have many Americans responding to today's news from the NBER with a great big whaa-aat.

Originally posted to Daily Kos on Mon Sep 20, 2010 at 02:50 PM PDT.

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