01-22-2004, 04:03 PM
Economists Say Recession Started in 2000
By Nell Henderson
Washington Post Staff Writer
Thursday, January 22, 2004; 1:34 PM
The last recession may have started in the last months of the Clinton administration rather than at the beginning of the Bush administration.
The panel of economists that serves as the official timekeeper for the nation's recessions is considering moving the starting date for the most recent economic decline back to November or December of 2000, a member of the group said today, confirming a report that appeared in The Wall Street Journal.
"We have discussed it already and there seems to be some inclination to move the date" to some time in the last three months of 2000, said Victor Zarnowitz. He is a member of the National Bureau of Economic Research's business cycle dating committee, which determines the widely accepted start and end dates to U.S. recessions.
The seven-member panel had earlier decided that the recession began in March 2001 and ended in November that year. President Bush took office in January 2001.
NBER is a private, nonprofit economic research group. Zarnowitz, an economist with the Conference Board, another private research group, said the dating decision will be nonpolitical, based solely on recently revised government economic data.
"Presidents don't have so much to do, in my opinion, with when recessions start," Zarnowitz said. "Clearly the boom happened under Clinton, and the boom generates the bust. And no administration has the power to change that."
NBER President Martin Feldstein said, "It is clear that the revised data have made our original March date for the start of the recession much too late," but he did not offer a different date. "We are still waiting for additional monthly data before making a final judgment," said Feldstein, a Harvard University economist. "Until we have the additional data, we cannot make a decision."
The Wall Street Journal story quoted Robert Hall, a Stanford University economics professor who chairs the dating committee, saying that "a reasonable look at the numbers" could lead one to decide that the recession started some time between November 2000 and February 2001.
Zarnowitz said he will look further at the data, but thinks now that "the recession started maybe November or December 2000 and lasted to November of 2001." If so, that would be an average duration for a post World War II recession, changing the perception up until now that the last recession was shorter than average.
Zarnowitz said he does not know when the committee will meet to make an official decision.
The panel picked March 2001 as the beginning of the recession primarily because that was when U.S. payroll employment began to drop seriously. Since then, the economy has lost some 2.4 million jobs.
But the economists look at other indicators as well. The group defines a recession as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP [inflation-adjusted gross domestic product], real income, employment, industrial production and wholesale-retail sales. A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough."
In previous recessions, the payroll jobs number was a pretty good proxy for economic growth, rising and falling as the economy expanded and contracted, although often with a bit of a lag. But the two have diverged dramatically in recent years, with payrolls continuing to shrink more than two years after the end of the recession. Meanwhile the nation's output of goods and services, or GDP, declined in the first three quarters of 2001, but started growing again in the fourth quarter of that year and has continued to rise since then.
This has been possible because businesses adopted new technology and management methods to boost production while shedding workers. The growth in productivity -- the amount of goods and services produced for each hour worked -- rose through the contraction and recovery since.
Zarnowitz said the NBER dating committee closely follows an index that combines measures of industrial production, total demand, personal income minus government transfer payments, and the number of nonfarm payroll jobs--giving more weight to the jobs component. According to recently revised data, the index "started falling in December or November 2000," he said.
"Three of the four components would definitely point to an earlier date" for the beginning of the recession, he said. "Only one lagged."
By Nell Henderson
Washington Post Staff Writer
Thursday, January 22, 2004; 1:34 PM
The last recession may have started in the last months of the Clinton administration rather than at the beginning of the Bush administration.
The panel of economists that serves as the official timekeeper for the nation's recessions is considering moving the starting date for the most recent economic decline back to November or December of 2000, a member of the group said today, confirming a report that appeared in The Wall Street Journal.
"We have discussed it already and there seems to be some inclination to move the date" to some time in the last three months of 2000, said Victor Zarnowitz. He is a member of the National Bureau of Economic Research's business cycle dating committee, which determines the widely accepted start and end dates to U.S. recessions.
The seven-member panel had earlier decided that the recession began in March 2001 and ended in November that year. President Bush took office in January 2001.
NBER is a private, nonprofit economic research group. Zarnowitz, an economist with the Conference Board, another private research group, said the dating decision will be nonpolitical, based solely on recently revised government economic data.
"Presidents don't have so much to do, in my opinion, with when recessions start," Zarnowitz said. "Clearly the boom happened under Clinton, and the boom generates the bust. And no administration has the power to change that."
NBER President Martin Feldstein said, "It is clear that the revised data have made our original March date for the start of the recession much too late," but he did not offer a different date. "We are still waiting for additional monthly data before making a final judgment," said Feldstein, a Harvard University economist. "Until we have the additional data, we cannot make a decision."
The Wall Street Journal story quoted Robert Hall, a Stanford University economics professor who chairs the dating committee, saying that "a reasonable look at the numbers" could lead one to decide that the recession started some time between November 2000 and February 2001.
Zarnowitz said he will look further at the data, but thinks now that "the recession started maybe November or December 2000 and lasted to November of 2001." If so, that would be an average duration for a post World War II recession, changing the perception up until now that the last recession was shorter than average.
Zarnowitz said he does not know when the committee will meet to make an official decision.
The panel picked March 2001 as the beginning of the recession primarily because that was when U.S. payroll employment began to drop seriously. Since then, the economy has lost some 2.4 million jobs.
But the economists look at other indicators as well. The group defines a recession as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP [inflation-adjusted gross domestic product], real income, employment, industrial production and wholesale-retail sales. A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough."
In previous recessions, the payroll jobs number was a pretty good proxy for economic growth, rising and falling as the economy expanded and contracted, although often with a bit of a lag. But the two have diverged dramatically in recent years, with payrolls continuing to shrink more than two years after the end of the recession. Meanwhile the nation's output of goods and services, or GDP, declined in the first three quarters of 2001, but started growing again in the fourth quarter of that year and has continued to rise since then.
This has been possible because businesses adopted new technology and management methods to boost production while shedding workers. The growth in productivity -- the amount of goods and services produced for each hour worked -- rose through the contraction and recovery since.
Zarnowitz said the NBER dating committee closely follows an index that combines measures of industrial production, total demand, personal income minus government transfer payments, and the number of nonfarm payroll jobs--giving more weight to the jobs component. According to recently revised data, the index "started falling in December or November 2000," he said.
"Three of the four components would definitely point to an earlier date" for the beginning of the recession, he said. "Only one lagged."
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