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WASHINGTON – Some Commerce Department economists think the National Bureau of Economic Research called a recession too early, WorldNetDaily has learned.
The bureau, which officially dates U.S. business cycles, ruled in November that the record-long economic boom ended in March 2001 and a recession began at the same time.
But the traditional definition of a recession is at least two consecutive quarters of negative real GDP growth, as measured by Commerce’s Bureau of Economic Analysis, or BEA.
That hasn’t happened.
The economy grew 0.3 percent in the second quarter of last year, followed by a dip of 1.3 percent in the third quarter.
But the economy returned to positive territory in the fourth quarter, growing an inflation-adjusted 0.2 percent.
Though anemic, many private economists predict the rebound will continue this quarter, as manufacturing activity picks up.
Commerce economists and statisticians who calculate the national income numbers are shaking their heads over the NBER’s decision to call the recession last year.
“Some people feel that they made their call too soon,” said BEA economist Terry Weadock.
So why is everyone, from the media to Wall Street to Congress, saying America is in a recession?
“Because the people who make these decisions at the National Bureau of Economic Research base their decisions on different things,” Weadock explained. “They look more at monthly indicators, such as industrial production and employment.”
Headquartered in Cambridge, Mass., NBER’s Business Cycle Dating Committee is composed of academic economists from Harvard, Stanford and other universities.
The panel, which told WorldNetDaily it stands behind its call, originally said a full-blown downturn might have been avoided if not for the Sept. 11 terrorist attacks.
“Before the attacks,” the group said in its Nov. 26 statement, “it is possible that the decline in the economy would have been too mild to qualify as a recession.”
Few anticipated, however, that the economy would recover so quickly from the shock to travel and tourism. The stock market also has dug out from post-attack lows.
“I’d be cautious in saying the economy has recovered so quickly,” said NBER spokeswoman Donna Zerwitz, referring to the fourth-quarter rebound.
“GDP figures are often revised, and this is the first one that came out for the fourth quarter,” she argued in an interview with WorldNetDaily. “And that doesn’t mean it will be the last one that will come out for the fourth quarter.”
Indeed, there is always the chance that the government will revise downward real GDP growth figures for the second or fourth quarters.
The advance GDP growth estimate for the second quarter was 0.7 percent. That was lowered to 0.2 percent in the preliminary government revision, before ticking back up to 0.3 percent in the final revision.
The government initially reported third-quarter GDP declined 0.4 percent, but that has been revised to a much sharper drop of 1.3 percent.
BEA economists, however, say that even if preliminary, final or benchmark revisions show back-to-back declines in quarterly GDP, the recession would be one of the mildest on record – and even milder than the 8 1/2-month recession in 1990 and 1991.
“If it’s a recession, it’s a very mild recession so far,” Weadock said.