Federal Reserve Chairman Ben Bernanke

Is America in a Recession?

May 08, 2008 11:30 AM
by findingDulcinea Staff
by Anne Szustek
The 2008 U.S. economy has not fit into the textbook definition of a recession, but most economists say the country is in the midst of a slump.

30-Second Summary

The National Bureau of Economic Research, a nongovernmental committee that The Economist termed “the official arbiter of American business cycles,” 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.”

But having a clear definition doesn’t mean that economists agree.

The International Monetary Fund said in April there’s a 25 percent chance we’ll see a recession this summer. Federal Reserve Chairman Ben Bernanke has slashed interest rates seven times over the past eight months. And 36 of 51 prominent economists polled by The Wall Street Journal in March said that America is officially in an economic downturn.

Others are more upbeat. Berkshire Hathaway CEO Warren Buffett told shareholders at the company’s annual meeting last week that there is potential in the U.S. markets, and U.S. Treasury Secretary Henry Paulson said Wednesday that the economy is on the rebound following an “inflection point.”

But Paulson’s words indicate that the economy had indeed bottomed out. Analysts may not be able to determine correctly whether or not we are in a recession cycle for as much as 18 months.

Such questions over defining bearish market trends are nothing new. According to The New York Times, “The Bush Administration, the Federal Reserve and many private economic forecasters say that the … impact on oil prices and consumer confidence, caused the recession, and they say it is now coming to an end.”

That article ran in April 1991.

Headline Link: ‘Most Economists in Survey Say Recession Is Here’

Video: ‘The Worst is Behind Us’

Background: Defining recession

Historical Context: Other economic downturns and questions over terminology

Opinion & Analysis: Economy wonks give their take

Reference: FindingDulcinea’s Web Guide to the U.S. Economy; economic cycle data

Related Topic: ‘Foreign Banks Mull Whether to Prop Up the Dollar’


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