Are We in a Recession? 8 People Will Make the Call

But the obscure Business Cycle Dating Committee likely won't weigh in for months
By John Johnson,  Newser Staff
Posted Jul 28, 2022 11:18 AM CDT
Are We in a Recession? 8 People Will Make the Call
   (Getty/Sasin Paraksa)

The GDP shrank for the second quarter in a row, which is one traditional definition of a recession, notes CNBC. It is not, however, the official one. As the Wall Street Journal reports, any such designation would formally come from the National Bureau of Economic Research—and more specifically from the NBER's eight-member Business Cycle Dating Committee. Just don't hold your breath waiting for an announcement. The little-known committee typically takes its time assessing various factors—including unemployment, retail sales, household income, etc.—and often calls a recession months after it has begun. Sometimes, the designation comes after the recession has already ended.

"By far, the most important thing to try to convey is that the committee is not trying to do real-time dating of whether we’re in a recession," MIT economics professor James Poterba tells the Washington Post. Poterba is a member of the panel, as well as the NBER president. "There’s often enormous amount of interest in that question and what many people are hoping for, but the committee’s task is to create a consistent historical record of the turning points—the peaks and the troughs in the US economy." The committee's intent is to rise above the political fray, and its lineup of highly respected economists have served under both Democratic and Republican administrations, per the Post.

The NBER itself is actually a private non-profit group, not a government agency, another factor in making it difficult to gauge the panel's thinking. An outsider's view, one that seems to be common in business stories Thursday: "We’re not in recession, but it’s clear the economy’s growth is slowing," Mark Zandi, chief economist at Moody’s Analytics, tells CNBC. "The economy is close to stall speed, moving forward but barely." On Wednesday, Fed chief Jerome Powell made a point to say that GDP numbers, such as those released Thursday, must be taken with a "grain of salt" because they are often revised later, per Axios. (Read more recession stories.)

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