It is too soon to determine when the U.S. recession ended as data showing economic growth resumed are subject to revision, the arbiter of U.S. business cycles said on Monday.
Although most indicators have turned up, the committee decided that the determination of the trough date on the basis of current data would be premature, the National Bureau of Economic Research said in a statement.
Many indicators are quite preliminary at this time and will be revised in coming months, the group said.
The NBER said its business cycle dating committee, a group of economists that pinpoints when recessions begin and end, had met on April 8 to consider whether it had enough data to call the end of the latest slump.
The group looks at a range of indicators, not just gross domestic product, to determine when business cycles begin and end, and is well known for waiting many months before making its determinations.
During the last recession, which ended in November 2001, the NBER waited until July 2003 to make the determination, in part because unemployment continued to rise well after the business cycle had turned.
However, some committee members have said recently that they believed the recession ended last summer or fall, judging by economic growth, employment and other factors.
Many private economists think the downturn probably ended in June or perhaps a couple of months later. The economy resumed growth in the third quarter of 2009, although employment continued to contract for several more months. Payrolls have recorded only two monthly gains since the recession started -- in November 2009 and March 2010.
WHY THE DOUBT?
The NBER defines a recession as a significant decline in 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.
That means it does not follow rules of thumb such as two consecutive quarters of GDP to signal a recession, nor does it declare a downturn over as soon as GDP turns positive.
A closer look at the range of indicators the NBER watches helps explain its reticence. For instance, while real GDP has been growing since the middle of 2009, personal income flattened in February and industrial production growth has been inconsistent.
The next report on industrial output is due on Thursday, and economists are looking for a relatively robust gain of 0.7 percent, which would be far ahead of February's 0.1 percent.
Another problem for the NBER is that it must determine the month in which the recession ends, yet economic output is reported on a quarterly basis, said Jeffrey Frankel, a committee member who teaches economics at Harvard University.
He said the committee looks at both GDP and national income, a separate measure that gauges output based on income rather than spending. Gross domestic income did not turn positive until the fourth quarter of 2009, one period after GDP resumed growing.
The difference between GDP and GDI has been a hot topic of discussion among data watchers recently, particularly after a Federal Reserve economist released a paper suggesting that GDI gave a more accurate reading of the business cycle.
The economist, Jeremy Nalewaik, presented his research at a recent Brookings Institution conference that was chaired by David Romer, another NBER dating committee member.
Of the data that is reported monthly, Frankel said labor market indicators are the most important. His favorite measure, total hours worked, troughed in October.
Total hours worked tends not to lag behind economic activity as much as employment does, because firms start lengthening the workweek of their existing workers before they start hiring new workers, Frankel said in an emailed response to questions.
The NBER said its committee reaffirmed that the recession began in December 2007.
(Reporting by Emily Kaiser; Editing by Chizu Nomiyama and Andrew Hay)