Group: Recession Began In Dec. 2007
ROBERT SIEGEL, host:
From NPR News, this is All Things Considered. I'm Robert Siegel. And we begin this hour of our program with one of those news flashes that may not come as news to most of you. The country is in a recession. In fact, we've been in a recession since December of last year.
Today, the private research group that decides these things made it official. And as if to mark the news with an exclamation point, the stock market plummeted. The Dow was down nearly 700 points. NPR's Jim Zarroli has our story.
JIM ZARROLI: The National Bureau of Economic Research is famous for one thing and one thing alone. It's considered by most economists to be the official arbiter of when recessions begin. It usually takes months for the bureau to pour through all the data it looks at, and it often doesn't make its pronouncements until months after a recession has begun. Today, it finally made the call, saying the recession got under way a year ago. MIT professor James Poterba is the bureau's president.
Dr. JAMES POTERBA (Department of Economics, Massachusetts Institute of Technology; President, National Bureau of Economic Research): It's been a really remarkable and quite difficult economic time in the last five or six months, and we've seen things happening in the U.S. economy and the credit sector and the financial sector and the housing market that are of extraordinary proportion.
ZARROLI: Poterba said the call this time around was a complicated one. During the first half of 2008, the U.S. economy was actually growing slightly, at least according to the Commerce Department.
And though that would seem to rule out a recession, the bureau ultimately decided that other factors made one more likely. Incomes were falling, and the labor market was shrinking. Payroll numbers peaked last December and have been falling steadily ever since. Peter Morici is an economist at the University of Maryland.
Dr. PETER MORICI (Department of Economics, University of Maryland): We've lost over a million jobs since last December. We're likely to lose another - almost 300,000 in November. Yes, we're in a recession.
ZARROLI: Morici says the bureau's pronouncement isn't really a surprise.
Dr. MORICI: Most of us have been saying we've been in a recession for at least six months now. We've seen it in the employment data. We've known that the economy is going to contract. We've seen it in the lending data of banks. All the indicators are down. If we're not in a recession, then the sun isn't rising tomorrow.
ZARROLI: Treasury Secretary Henry Paulson echoed that sentiment today, saying the pronouncement of a recession isn't likely to be big news to most Americans, but it does make it official.
The bureau doesn't try to asses how severe the recession is or speculate about how long it's likely to last, but plenty of other economists are doing that. Today, none other than Federal Reserve Chairman Ben Bernanke gave a downbeat report about where the economy is going. In a speech in Texas, Bernanke said things have only gotten worse in recent months.
Mr. BEN BERNANKE (Chairman, Federal Reserve): The U.S. economy remains under considerable stress. Economic activity was weakening even before the intensification of the financial crisis this fall. The sharp falloff and consumer spending during the summer was particularly striking.
ZARROLI: Bernanke said those factors are likely to weigh on the economy in the months to come. In the hours after Bernanke's speech, the stock market took another steep plunge. The Standard & Poor's 500 index lost nearly nice percent of its value, and the other major stock indexes were down as well. It was a huge drop even by recent standards, and it wipes out much of the gains that the market has enjoyed in recent weeks. Jim Zarroli, NPR News, New York.