Click to play videoNew Delhi: The National Bureau of Economic Research (NBER) has officially declared that the US economy is indeed getting into recession.
The bureau says that the economic slump in fact started somewhere in December 2007. According to the NBER, in January 2008 personal income in the US fell.
This happened at a time when industrial production peaked in the country. This has led to a market with abundant supply of goods but with very few buyers for them.
Experts believe that the current downturn may last till the middle of 2009 and will be the most severe slump since the 1981-82 recession.
Recession is generally defined as two consecutive quarters of declining activity but the NBER panel has its own criteria for determining a downturn.
It says that a recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income and other indicators.
The report also suggested that a recession begins when the economy reaches a peak of activity and ends when the economy reaches its trough. Between trough and peak, the economy is in an expansion.
The NBER also adds that the US economic expansion lasted about 73 months from November 2001, before it started contracting.
A broad range of economic indicators such as employment and production, to make this judgement and a statement issued said that "decline in economic activity in 2008 met the standard for a recession". It defines a recession as a "significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income and other indicators."
It said that employment peaked in December 2007 and has been falling ever since. Personal income began falling in the first quarter of 2008, while industrial production peaked in January 2008.
Key monthly indicators of economic output including employment, industrial production, real personal income, and wholesale and retail sales were used by the NBER to determine when economic growth has turned negative. It did not solely rely on two quarterly declines in GDP.
The NBER is a private sector body and has been dating the business cycle since 1929.
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