The Great Recession ended last summer: It’s official

The Great Recession is officially over — and has been for more than a year.

The panel of economists that is the widely accepted arbiter of business cycles has called an end to what is now officially the longest U.S. economic downturn of the post-World War II era. The recession ended in June 2009, 18 months after it began in December 2007, according to the National Bureau of Economic Research’s business cycle dating committee.

But the committee took pains to make clear that it was not asserting that the economy has returned to full health.
“In determining that a trough occurred in June 2009, the committee did not conclude that economic conditions since that month have been favorable or that the economy has returned to operating at normal capacity,” the committee said in statement published on the NBER’s Web site. “Rather, the committee determined only that the recession ended and a recovery began in that month.”

In other words, economic activity peaked at the end of 2007, fell for a year and a half, and has been rising since then. But it hasn’t risen back to its pre-recession levels yet. Moreover, the committee said, “any future downturn of the economy would be a new recession and not a continuation of the recession that began in December 2007.”
The committee moves slowly and cautiously in its pronouncements, aiming not to characterize the economy in real time but rather to establish historical benchmarks for when periods of economic expansion and contraction begin and end. It waits until ample economic data is available and has been revised, and hence there are often long delays between the onset or end of a recession and the NBER’s call. The recession that began in December 2007 was not formally designated one until a year later.

The committee defines a recession as “a period of falling economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.” The designation of June 2009 as an end date for the recession conforms to a view that many economic analysts have held for some time.

According to the committee, such indicators as gross domestic product and industrial production appear to have bottomed out in June 2009. Others, however, particularly involving employment, did not begin expanding until December 2009.

The business cycle dating committee consists of eight top macroeconomists, chaired by Stanford University’s Robert Hall. Only seven participated in the decision, however: David Romer, an economist at the University of California, Berkeley, is on leave as his wife, Christina Romer, was until recently serving as a top adviser to President Obama.