NBER CONFIRMS POLICY FOUNDATION FINDING

RECESSION ENDED IN 2009

“(I)ndicators suggest the Great Recession that started in December 2007 ended earlier this year, most likely in June, although a formal declaration by the National Bureau of Economic Research is unlikely for months.” Policy Foundation column in Arkansas Business Weekly, December 14, 2009

“The committee determined that a trough in business activity occurred in the U.S. economy in June 2009.” Business Cycle Dating Committee, National Bureau of Economic Research, September 20, 2010

(September 20, 2010) A panel of top economists announced today the U.S. recession ended in June 2009, a finding reached by the Foundation in a research memo (November) and op-ed (December) published late last year.

The Business Cycle Dating Committee of the Cambridge, Mass.-based NBER, a nonprofit founded in 1920, said the economy reached a trough based on these indicators: monthly GDP (Macroeconomic Advisers’): monthly GDP index, monthly GDI index and average of two indexes (Stock-Watson); real manufacturing and trade sales and real personal income less transfer payments; Industrial Production index (Federal Reserve); aggregate hours of work in the economy; and payroll and household employment surveys (Bureau of Labor Statistics). The Policy Foundation has emphasized four of these indicators (production, sales, income, and employment) in its research.

Weak Jobless Recovery

The economy is in a weak jobless recovery similar to the end of the last two recessions (1990-91, 2001). Payroll employment is lower than in June 2009. Uncertainty about extension of the Bush tax cuts, and cap-and-trade and card check regulatory proposals pending in Washington have added to job losses.

-- Greg Kaza

Additional Resources:

NBER announcement: http://www.nber.org/cycles/sept2010.html

Recent Policy Foundation academic research on NBER and the business cycle:

http://mises.org/journals/qjae/pdf/qjae13_2_4.pdf