Official
Pretty much everyone, including me, referred to the recession as having been “officially” called yesterday when the National Bureau of Economic Research’s Business Cycle Dating Committee decided that the recession began in December 2007. This raises the point that despite the “national” in the name, and people’s tendency to regard NBER’s calls as “official,” it’s not actually an official outfit in the sense of being a government agency or anything. It’s a non-profit in located near a bunch of furniture stores in Cambridge. Reliance on the NBER is just a longstanding tradition, and it’s actually a slightly odd one; this seems like the kind of things one of the official government statistics agencies would do. That we don’t do it that way isn’t necessarily a huge deal, but it’s still pretty strange if you ask me.
31 Responses to “Official”
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December 2nd, 2008 at 9:08 am
It is a good thing it is not a government agency, otherwise under the Bush regime we would have a Dana Perino-type as head of the NBER, telling us every month that the economy is doing great.
December 2nd, 2008 at 9:30 am
No government policies hinge on whether or not we’re in a recession, so there’s no reason for an official declaration. It’s not like a an official declaration of a disaster area after a hurricane which releases federal relief funds. A recession is just a scientific category designated by a committee of experts, just like a committee of psychologists decides which maladies go into the DSM-IV.
December 2nd, 2008 at 9:36 am
The NBER maintains the committee so that its macroeconomic researchers have a consistent definition of recessions to use.
December 2nd, 2008 at 10:21 am
Oh, well, now its official! Well I guess that changes every…er, nothing?
December 2nd, 2008 at 12:10 pm
I think the idea is that, just because it is a private non-profit- the NBER is independent and non-partisan. The hyphenated word is, of course, a joke. I love the NBER, but the chairmen of the business cycle timing committee are not exactly non-partisan. The guy who chaired the committee that decided that there was a recession in 1980 even though there weren’t two consecutive quarters of GNP decline (making that official recession unique) was named Martin Feldstein and went on to chair something else. They called the recession less than six months after the alleged peak “CAMBRIDGE, June 03 — The NBER’s Business Cycle Dating Committee met today at the … January 1980 as the most recent peak in U.S. business activity.” You’ll notice that the 1980 recession was unique in another way since it didn’t last. The trough was dated July 1980 (but was announced in July 1981 with the election safely over “Latest announcement from the NBER’s Business Cycle Dating Committee, dated 12/01/08. … The July 1980 trough was announced July 8, 1981. …).
The current chairman, Robert Hall, said something like “are you joking” when asked if he would call a recession without 2 consecutive quarters of decline in 2008. You will notice that Brad DeLong definitely claimed that the NBER held off calling the recession until the election was over.
“I say that the NBER Business Cycle Dating Committee should decide this week whether the recession began in November or June. I don’t see how waiting any longer will give us any more information useful in deciding between those two dates. And I don’t see any justification for waiting–other than that perhaps one does not want to announce a recession call just before an election.”
http://delong.typepad.com/sdj/2008/10/the-recession-2.html
December 2nd, 2008 at 1:43 pm
Its probably better that it isnt a govt agency. Otherwise we would never officially have a recession.
December 2nd, 2008 at 2:29 pm
“it’s not actually an official outfit in the sense of being a government agency or anything.”
In addition to the other objections above, it really isn’t that weird to have ‘official’ decisions for all sorts of things to be adjudicated by non-government outfits of one sort or another.
It happens for standards in electronic or programming work all the time. It happens with things as mundane as screw sizes. It just isn’t that weird.
December 2nd, 2008 at 4:04 pm
Academic accreditation of Universities is something done by non-governmental bodies in the United States (govts typically do this elsewhere). Since accreditation is typically necessary for Universities to receive federal funds and student loans to be awarded, this is a situation where decisions of non-government bodies drive flows of government money.
It is also worth noting that this non-government model of accreditation has proven to be quite credible. Many foreign universities feel the need to get US accreditation to signal quality to the international market. They do this even though they already have stamps of approval from their own government.
I guess I am saying that I agree with Sebastian. This isn’t that weird.
December 2nd, 2008 at 8:44 pm
They may not be totally immune to partisan considerations, but having the NBER date the recession and the BEA use that dating as the official recession dating is a very smart move by the BEA that avoids what would otherwise be a risk of very heavy politicization of the BEA.
December 2nd, 2008 at 9:06 pm
“The current chairman, Robert Hall, said something like “are you joking” when asked if he would call a recession without 2 consecutive quarters of decline in 2008.”
There haven’t been two consecutive quarters of decline, yet a recession was declared.
December 3rd, 2008 at 8:46 pm
…this seems like the kind of things one of the official government statistics agencies would do. That we don’t do it that way isn’t necessarily a huge deal, but it’s still pretty strange if you ask me.
Actually what’s strange is this idea that “a recession” ever needs to or should be “Officially Declared” in the first place or that it’s important when/whether they are “Declared”. “Recession” is an arbitrary label placed on this or that state of economic affairs. And as far as I can tell, there is basically nothing of significance that actually depends on whether a given state of affairs is “Officially A Recession” or not. So I have a hard time understanding why anyone should care. Folks who read charts and amass numbers to try to “prove” (or “disprove”) that it’s “a recession” remind me of nothing so much as people who spend their time classifying rock bands into a complicated family tree of named subgenres. It’s fine to do it as a hobby, but nothing of consequence actually follows from the resulting labels. And we certainly wouldn’t need to have an “official” labeling of rock bands – nor do we need an “official” labeling of recession.
Obviously there is always an everpresent faction of people which (1) seem to practically lust after a “recession” (witness some of the comments above) because (2) apparently short-circuiting more substantive thoughts and discussions, they think “it’s a recession” would somehow be a convenient, automatic critique of whatever political party is incumbent.
But this is not a serious respectable/objective reason to be categorizing or declaring “recessions”. Yet no one seems to be able to give any other reasons. Just once I’d like to see someone be able to complete this sentence: If it’s not officially a recession, we can’t ____, but if it is officially a recession, we can ___.
With something other than putting “bludgeon the opposing political party and win elections” in both blanks, I mean.
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