Number Crunchers vs. Recession; Seeking Official End, Panel Wrestles With One Stubborn Stat
The arbiter of when U.S. economic recessions begin and end, the Business Cycle Dating Committee of the National Bureau of Economic Research, has laid the groundwork for calling an official end to the slump that began in March 2001.</br></br>It could be weeks or months before that happens, but the committee has found a way around the fact that its key monthly indicator, payroll employment, has continued to decline long after the economy resumed growing.</br></br>The committee designated March 2001 as the beginning of the recession primarily because that was when the number of payroll jobs began to drop, a decline of 2.6 million so far.</br></br>If the committee were to rely on the same indicator to date the end of the slump, the recession would already have lasted for two years and three months, making it the longest since the vastly more serious downturn that began in 1929 and became the Great Depression.</br></br>Until the 2001 recession, the employment number and other indicators used by the committee have done a generally good job of tracking the rise and fall of the nation's economic output. This time, however, changes in payroll employment have not been a good proxy for economic growth, because productivity -- the amount of goods and services produced for each hour worked -- has continued to increase through the economy's contraction in 2001 and sluggish expansion since. That has allowed companies to increase production while cutting their workforces.