Actually, the Business Cycle Dating Committee of the National Bureau of Economic Research is the body that officially determines when a recession starts, and this body also determines the criteria by which the determination is made. A lot of the confusion surrounding the recent determination that we’ve been in a recession since late in 1997 is due to the fact that this group changed the way they define the start of a recession. Under the old definition, a recession was defined as two consecutive quarters of negative growth in GDP, whereas under the new rule a recession starts when GDP growth peaks. There is a FAQ sheet on the NBER site (www.nber.org) about this change in which they state that under the 2 consecutive quarter rule they could not yet call this a recession. Interestingly, one of the 8 members of the committee that made the decision to change the way the start of recessions is determined then resigned to join the incoming administration as chair of the council of economic advisors.
Actually, the Business Cycle Dating Committee of the National Bureau of Economic Research is the body that officially determines when a recession starts, and this body also determines the criteria by which the determination is made. A lot of the confusion surrounding the recent determination that we’ve been in a recession since late in 1997 is due to the fact that this group changed the way they define the start of a recession. Under the old definition, a recession was defined as two consecutive quarters of negative growth in GDP, whereas under the new rule a recession starts when GDP growth peaks. There is a FAQ sheet on the NBER site (www.nber.org) about this change in which they state that under the 2 consecutive quarter rule they could not yet call this a recession. Interestingly, one of the 8 members of the committee that made the decision to change the way the start of recessions is determined then resigned to join the incoming administration as chair of the council of economic advisors.