The Recession: It’s Official Now

The business cycle dating committee of the National Bureau of Economic Research today announced their determination that the peak of the last expansion occurred in December 2007, coinciding with the peak in employment. This means the recession started in January 2008, the month employment began to decline. Although they consider other factors as well, the labor market was the primary factor in this case.

This means that we've already been in recession longer than the past two recessions, which were relatively shallow as well as brief. Commentators would make a mistake, however, if they start applying rule of thumb to this recession using the January 2008 beginning date since the employment losses were relatively modest for a recession period through August.  In September and October, 2008, employment losses steepened and, judging from new applications for unemployment insurance, will have continued to do so in November. That will likely be confirmed Friday morning, December 5th.

What I mean about not applying rules of thumb is that for the first 9 months or so, the recession was mild; and it's becoming much more serious now. For some purposes, September might be a more relevant starting date than January. You might think of it as a recession within a recession.