The National Bureau of Economic Research determined that December 2007 marked the peak of a 73-month expansion in the economy and the beginning of the current recession.
The bureau's Business Cycle Dating Committee maintains a chronology of the beginning and ending dates (months and quarters) of U.S. recessions. It says the December 2007 peak marks the end of the expansion that began in November 2001 and the beginning of a recession. The expansion lasted 73 months; the previous expansion of the 1990s lasted 120 months.
A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators. A recession begins when the economy reaches a peak of activity and ends when the economy reaches its trough. Between trough and peak, the economy is in an expansion.
Because a recession is a broad contraction of the economy, not confined to one sector, the committee emphasizes economy-wide measures of economic activity. The committee believes that domestic production and employment are the primary conceptual measures of economic activity. The committee views the payroll employment measure, which is based on a large survey of employers, as the most reliable comprehensive estimate of employment. This series reached a peak in December 2007 and has declined every month since then.
The committee believes that the two most reliable comprehensive estimates of aggregate domestic production are normally the quarterly estimate of real Gross Domestic Product and the quarterly estimate of real Gross Domestic Income, both produced by the Bureau of Economic Analysis. But the currently available estimates "do not speak clearly about the date of a peak in activity," said the committee.
Other series considered by the committee-including real personal income less transfer payments, real manufacturing and wholesale-retail trade sales, industrial production, and employment estimates based on the household survey-all reached peaks between November 2007 and June 2008.
The committee does not accept the commonly used definition of a recession as two consecutive quarters of decline in real Gross Domestic Product. "Most of the recessions identified by our procedures do consist of two or more quarters of declining real GDP, but not all of them," the bureau explained on its web site. "As an example, the last recession, in 2001, did not include two consecutive quarters of decline." As of the date of the committee's meeting (Nov. 28), the economy had not yet experienced two consecutive quarters of decline.
For more information, see wwwdev.nber.org/cycles/dec2008.html