Today (July 19, 2021) the National Bureau of Economic Research (NBER) Business Cycle Dating Committee (BCDC) declared the end of the recession that began in February 2020. [That declaration of recession was highlighted in the post titled “Recession Declared For The United States By The NBER BCDC.”]
Today’s announcement is seen on the NBER page titled “Business Cycle Dating Committee Announcement July 19, 2021.” The subtitle is “Determination of the April 2020 Trough in US Economic Activity.”
The Business Cycle Dating Committee of the National Bureau of Economic Research maintains a chronology of the peaks and troughs of US business cycles. The committee has determined that a trough in monthly economic activity occurred in the US economy in April 2020. The previous peak in economic activity occurred in February 2020. The recession lasted two months, which makes it the shortest US recession on record.
The NBER chronology does not identify the precise moment that the economy entered a recession or expansion. In the NBER’s convention for measuring the duration of a recession, the first month of the recession is the month following the peak and the last month is the month of the trough. Because the most recent trough was in April 2020, the last month of the recession was April 2020, and May 2020 was the first month of the subsequent expansion.
In determining that a trough occurred in April 2020, the committee did not conclude that the economy has returned to operating at normal capacity. An expansion is a period of rising economic activity spread across the economy, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. Economic activity is typically below normal in the early stages of an expansion, and it sometimes remains so well into the expansion.
The committee decided that any future downturn of the economy would be a new recession and not a continuation of the recession associated with the February 2020 peak. The basis for this decision was the length and strength of the recovery to date.
I have discussed the importance of business cycle classifications and terminology in various posts, including that of August 8, 2013 titled “Thoughts Concerning The Business Cycle.” As I noted in that post, “…the BCDC does not define or classify a (economic) Depression.”
The Special Note summarizes my overall thoughts about our economic situation
SPX at 4258.49 as this post is written