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Sat, Jul 19, 2003 - Page 12 News List

US recession is over: economists


The 2001 recession, the US' first downturn in a decade, officially ended in November of that year, only eight months after it had begun, an academic group declared Thursday.

The decision was made by the National Bureau of Economic Research, a group of academic economists which is the recognized arbiter of when recessions begin and end in the US.

The announcement came after a meeting of the NBER's Business Cycle Dating Committee, which has struggled for months to reconcile the fact that while the US economy resumed growth in late 2001, as measured by the gross domestic product, unemployment has continued to rise.

While the determination of the official ending date for the recession is of interest to economic historians, it is likely to bring little comfort to unemployed workers, who have seen their ranks swell in recent months.

The unemployment rate hit a nine-year high of 6.4 percent last month US, bringing more charges from Democrats that US President George W. Bush is mishandling the economy.

In a statement, the NBER cycle dating committee stressed that its announcement of when the downturn ended did not mean that the economy's hard times ended at that point.

"In determining that a trough occurred in November 2001, the committee did not conclude that economic conditions since that month have been favorable or that the economy has returned to operating at normal capacity," the panel said in a statement.

The panel said that it was determining only that in November 2001, the recession -- which it defines as a period of falling economic activity spread across the economy -- came to an end and the economy began growing again.

After contracting for the first three quarters of 2001, the GDP, the country's total output of goods and services, began growing again in the fourth quarter of 2001 and has been rising ever since, although in a zig-zag pattern that has not been strong enough to keep unemployment from rising further.

The so-called jobless recovery surpasses in duration a similar jobless recovery that US President George Bush -- the current president's father -- had to endure in the months after the recession of that period had ended in March of 1991.

The NBER did not decide to declare the 1990 to 1991 recession over until December of 1992, after Bush's father had lost his re-election bid to President Bill Clinton, who had made the economy's poor performance the centerpiece of his campaign attacks on the Republicans.

The NBER's decision to declare the recession ended in November 2001 means that the eight months length is slightly less than the average 11-month duration of recessions since the end of World War II.

While an often-used definition of a recession is two consecutive quarters of falling GDP, the NBER uses a more complex formulation that looks at a variety of monthly statistics to determine when recessions begin and end.

In the past, it has not used the GDP for its purposes of determining the beginning and ending points for recessions because that statistic from the US Department of Commerce is compiled on a quarterly basis.

However, because of the unusual nature of this downturn, where growth resumed so far ahead of an improvement in the unemployment rate, the committee decided to also look at GDP as well as its other four indicators -- employment, real income, industrial production and wholesale-retail sales.

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