Interesting piece in Business Week on the independent National Bureau of Economic Research (NBER). They are the official arbiters of economic downturns, the ones who actually date the beginning and end of recessions.
What it takes to call an actual recession:
"Many people think the definition of a recession is two consecutive quarters of decline in the gross domestic product. But that’s a misperception. Hall and his colleagues will look beyond such simple metrics, weighing monthly GDP estimates, employment data, income, industrial production, and other factors. To call a recession, they’ll look for clear signs of "a significant decline in economic activity spread across the economy, lasting more than a few months."
Any call, if it comes, is going to take a while. The NBER usually takes 6 to 18 months to decide when a recession starts or ends. Hall’s committee didn’t announce the end of the 2001 recession until a full 20 months after the fact…
Check it out . . .
Why So Long to Call a Recession?
Business Week, May 19, 2008, 12:01AM EST http://www.businessweek.com/bwdaily/dnflash/content/may2008/db20080518_499756.htm