The longest U.S. recession since the Great Depression ended in June 2009, lasting 18 months, the National Bureau of Economic Research said.
“The committee decided that any future downturn of the economy would be a new recession and not a continuation of the recession that began in December 2007,” the Cambridge, Mass.-based bureau’s business cycle dating group said Monday. “The basis for this decision was the length and strength of the recovery to date.” The committee is the accepted arbiter of when recessions start and end.
Marked by a collapse in housing and sub-prime mortgage lending that triggered a global meltdown in financial markets, the downturn trailed the 43-month Great Depression that lasted from 1929 to 1933, surpassing the 16-month contractions of 1973- 75 and 1981-82. More than 8 million workers lost their jobs as a result of the recession, a slump that may take years to fix.
“The crisis imposed a huge cost on the nation and an even bigger cost on the people who suffered above-normal unemployment,” Robert Hall, Stanford University professor who heads the NBER committee, said in an interview in February. “The big factor in this recession is rapid productivity growth in all its phases, which implies deficient job growth even with normal output growth.”
The panel’s decision lagged behind declarations of other economists partly because it depends on payrolls, which were among the last economic indicators to rebound.
The committee also was also concerned about the possibility of a further decline. The panel “has to guard against the possibility, even if very small, that what seems to be the beginning of an expansion is actually just an interruption in a longer contraction,” the group said in April.
The National Association for Business Economics in October 2009 said the recession had ended, while Federal Reserve Chairman Ben S. Bernanke said in September 2009 the contraction “very likely” had ended.
Determining a date was complicated because economic growth resumed in the middle of 2009 while employment lagged behind, committee members said before the statement. The group typically takes six to 18 months after a recession is over to make a declaration.
“The recession was the worst since the 1930s,” Harvard University professor Jeffrey Frankel, another member of the committee, said in February. “Job loss was unusually severe relative even to output.”
The previous contractions in the post- World War II era lasted 10 months on average.
The NBER business cycle committee was formed when Martin Feldstein, an economics professor at Harvard University, became president of the NBER in 1978. Feldstein remains a panel member, though he has retired as president, a position now held by James Poterba, an economics professor at the Massachusetts Institute of Technology. Hall has chaired the committee since its inception.
The committee doesn’t just focus on gross domestic product to make its calls, shunning the informal definition of two quarters of declining output.