Friday June 22 4:37 PM ET NBER: Recession May Be Under Way NEW YORK (Reuters) - The world's largest economy may have recently entered a recession, according to The National Bureau of Economic Research (NBER), the official arbiter of U.S. business cycles.

But NBER, which only dates recessions and recoveries at least six months after their onset, said economic data is not sufficiently weak yet to merit a formal determination that the decade-long economic expansion is officially over.

``The data normally considered by the committee indicate the possibility that a recession began recently,'' NBER said in a report released on its Web site, http://www.nber.org/cycles/recessions.html, earlier this week.

``But the economy has not yet declined nearly enough to merit a meeting of the committee, or the determination of a peak date,'' said NBER, which has plotted U.S. business cycles dating back to 1854.

NBER's tone was markedly different from an April report that said ``nothing in the data is yet anywhere close'' to prompt an inquiry into whether the economy is now contracting.

While many economists define a recession as two straight quarters of declining gross domestic product, NBER sees a recession as a significant decline in industrial production, employment, income and trade lasting more then a few months.

From a September peak, U.S. industrial production has contracted for eight straight months by 3.9 percent, displaying weakness comparable to the 4.6 percent, six-month slide during the 1990-91 recession, NBER said.

But a second key determinant of recessions, U.S. non-farm employment, has not yet declined substantially enough to merit a formal recession inquiry, NBER said.

U.S. non-farm payrolls fell 182,000 in April and another 19,000 in May, compared with a total decline of about 1,900,000 workers in the 1990-91 recession.

``The data continue to suggest that the only substantial declines in real activity in the U.S. economy are in manufacturing,'' NBER said.

``Broader aggregates, such as employment and real retail sales, have stalled in recent months, but have not fallen significantly.''

NBER officially determined the July 1990 onset of the last recession only in April 1991. The bureau set that recession's March 1991 conclusion only in December 1992.

While any NBER determination may be months away, the Economic Cycle Research Institute (ECRI), a separate firm that tracks business cycles, says available data suggest a recession as defined by NBER has probably already begun.

``The indicators that define an official recession in this country have never been this bad without a recession. So either we are in a recession right now or we are in the worst non-recession ever recorded,'' said ECRI research director Anirvan Banerji.

The U.S. economy expanded at a sluggish 1.3 percent annual pace in the first quarter of 2001, a figure economists say may yet be revised down, after GDP (news - web sites) grew 1.0 percent in the fourth quarter of 2000. http://dailynews.yahoo.com/h/nm/20010622/bs/economy_usa_recession_dc_1.html

-- Carl Jenkins (somewherepress@aol.com), June 22, 2001

Answers

I think industrial production is the key. Eight straight months of decline is not good.

-- Uncle Fred (dogboy45@bigfoot.com), June 23, 2001.

Why do so many people doubt it? The signs are all around. As far as I'm concerned, yes, we are now in a recession - only to be played out, to prove it to everybody.

-- QMan (qman@c-zone.net), June 23, 2001.

The NERB has always been right in the past, though laggard. They may call this - current - recession about Jan., 2002.

-- Big Cheese (bigcheese@multimax.net), June 23, 2001.

The sound you hear is that of NBER heads being slowly extracted from their, uh ... sand.

-- Warren Ketler (wrkttl@earthlink.net), June 23, 2001.