The longest economic expansion in U.S. history faltered so much in the summer of 2000 that business output actually contracted for one quarter, the government said Wednesday in releasing a comprehensive revision of the gross domestic product.
Based on new data, the Commerce Department said that the GDP -- the value of the country’s total output of goods and services -- shrank at an annual rate of 0.5% in the third quarter of 2000.
Previously, the government had said the GDP had risen at a weak annual rate of 0.6% during that quarter.
The GDP returned to positive territory in the fourth quarter of 2000, rising at an annual rate of 2.1%, before slipping back into negative territory in 2001. The first, second and third quarters of 2001 all experienced falling GDP as the country slogged through its first recession since 1990-91.
The National Bureau of Economic Research, the official arbiter of when recessions begin and end, has determined that the recession began in March 2001 and ended in November of that year.
The beginning date may not be changed based on the revised GDP data because the bureau relies on monthly data, rather than quarterly statistics, to pinpoint when recessions begin and end.
Economists also generally believe that the GDP must contract for two consecutive quarters before the economy can be considered to be in a recession.
The revision to the GDP for the third quarter of 2000 was the most striking of scores of GDP revisions released by the Commerce Department as part of the agency’s latest updating of GDP statistics.
The government also changed the way it computes the effect of large insurance losses caused by disasters to smooth out their effect on the GDP. In addition, it modified the way it treats interest earned by banks on deposits.