Recession panel says it is re-examining starting date
Friday, January 23, 2004
WASHINGTON -- It turns out that President Bush may have inherited a recession after all.
The president often makes that claim when talking about the economy, prompting Democrats to charge he is fudging history since the recession began in March 2001, two months after he took office, according to the National Bureau of Economic Research.
But NBER officials said Thursday they are debating whether they made a mistake and the downturn actually began as early as November 2000, when Bill Clinton was still in the White House.
The seven-member cycle dating committee, composed of academic economists who specialize in studying business cycles, may well end up leaving the starting date of the recession alone, officials said.
"Nobody has even hinted at politics," said Jeffrey Frankel, a panel member who is an economics professor at the Kennedy School of Government at Harvard and was a member of the Council of Economic Advisers during the Clinton administration.
The NBER last changed a decision on dating a recession back in 1975. But the group's job this time was complicated by a number of factors, including a revision of the statistics making up the gross domestic product.
That revision, released last month, showed that the GDP, the country's total output of goods and services, shrank at an annual rate of 0.5 percent in the July-September quarter of 2000. Before the revisions, the GDP had remained positive through all of 2000 and turned negative for the first three quarters of 2001.
While the shorthand definition of a recession is two consecutive negative quarters of GDP, the NBER actually uses a broader definition of a "significant decline in economic activity" as measured by a number of economic indicators, including the Labor Department's monthly report on employment.
If the committee does decide to revise the starting date of the recession, it would take away Clinton's claim to be the first president since Lyndon Johnson not to have a downturn during his administration.
But Clinton would still have the distinction of presiding over the longest economic expansion in U.S. history. The length of the expansion is currently 120 months, from March 1991 until March 2001.
The next longest expansion is more than a year shorter at 106 months, from February 1961 until December 1969. A revision of the starting point of the recession back to November 2000 would mean the expansion still lasted for 116 months.
Under the NBER's dating procedures, an expansion ends and a recession begins in the same month. The current debate does not involve the NBER's determination, announced last July, that the last recession ended in November 2001.