It's official - U.S. in recession
Tuesday, November 27, 2001
WASHINGTON -- The United States fell into recession last spring, ending a record-breaking economic expansion at exactly 10 years. The downturn should be mild and end by the middle of next year, analysts said, but with a big caveat: no further devastating terrorist attacks.
The National Bureau of Economic Research, the recognized arbiter of when recessions begin and end in the United States, declared on Monday that the country entered a downturn last March, based on a range of statistics from employment to industrial production.
The panel of six prominent economists stressed that even though they had picked March as the official start of the recession, the country might have been able to avoid a full-blown recession had it not been for the Sept. 11 attacks.
"Before the attacks, it is possible that the decline in the economy would have been too mild to qualify as a recession," the NBER business cycle dating committee said in a statement.
The group's decision means that the longest expansion in U.S. history ended on its 10th birthday. The last recession lasted from July 1990 to March 1991, and the country had enjoyed since that time an unprecedented stretch of prosperity, a boom that drove the unemployment rate down to a 30-year low of 3.9 percent.
The previous record-holder for uninterrupted economic growth was a stretch of eight years and 10 months from February 1961 to December 1969.
President Bush, whose father was defeated in his 1992 re-election bid partly because of voter unhappiness about the last recession, told reporters at the White House the declaration of a new downturn underscored the urgent need for Congress to pass an economic stimulus plan.
"The Senate needs to get a bill and get it into conference, so we can resolve differences and I can sign it before Christmas," Bush said. "I am obviously aware that our economy is slow, and we will do everything we can to enhance recovery."
Senate Democratic Leader Tom Daschle of South Dakota countered that it was Republicans who were being obstructionists on the stimulus package. "Now is not the time to play politics with our economy and security," Daschle said.
A recession is often defined as at least two consecutive quarters of declines in the gross domestic product, the country's total output of goods and services.
However, the NBER dated the start of this downturn in March, when GDP growth remained positive. The Gross Domestic Product did not turn negative until the July-September quarter this year, when it fell at an annual rate of 0.4 percent.
Jeffrey Frankel, an economist at the Kennedy School of Government and one of six NBER panel members, said the panel was unanimous in its belief that March represented the recession's starting date. Employment peaked in March, while industrial production peaked in September 2000 and personal income has yet to peak.
The NBER panel made no forecast of how long the recession will last. Private economists noted the average length of the 10 previous recessions in the post-World War II period has been 11 months.