Confirmed: We Are in a Recession
November 27, 2001

“March,” said Sylvia. “It began in March.”

“What began in March?” said Anand, as he fiddled with the TV remote, looking for the Food Network.

“The recession.”

“Oh, that,” said Anand absent-mindedly. Iron Chef was on.

And so it is with the news of the recession. What many people had suspected for long has now been confirmed: The US economy is officially in a recession. After a decade of economic growth, a period during which incomes and productivity rose, employment surged, and the budget surplus mounted, the country's economic fortunes have faltered.

“Who decides that we are in a recession, anyway?” said Anand after a while. It was a commercial break. “The government? Alan Greenspan?”

“Neither,” said Sylvia. “The decision is made by a non-profit organization called the National Bureau of Economic Research. NBER, for short. They have a committee known as the Business Cycle Dating Committee...”

“A dating committee, eh?” said Anand roguishly.

“...which consists of six academic economists,” Sylvia continued, undeterred. “One of them is Martin Feldstein.”

“Old Marty,” commented Anand. “Chairman of the Council of Economic Advisors under President Reagan.”

“The same,” said Sylvia.

Conversation flagged. Iron Chef had resumed.

The NBER committee considered data on four variables: employment, industrial production, manufacturing and trade sales, and personal income. Starting in March, they noted, the first three had fallen, with industrial production dropping rather steeply and the other two exhibiting milder declines. The fourth variable, personal income, somewhat curiously, had actually risen since March–a fact they attributed to rising labor productivity. In previous recessions, all four had tended to decline.

The announcement by NBER, noted Sylvia, did not alter the current economic reality. In fact, the stock market, having already factored in the weakness of the economy, did not fall upon the arrival of the news. But, thought Sylvia, the notion that we were in a recession might lend urgency to efforts by Congress and the administration to pass an economic stimulus package. Were tax cuts and spending increases, she wondered, just around the corner?

Iron Chef was over. “Boy, that show always makes me hungry,” said Anand.

There was no response from Sylvia. She was immersed in the Business section of the Press-Gazette....

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