It still feels like a recession
So economic output only scraped zero in the first quarter instead of dipping below, at least according to preliminary estimates. Gross domestic product grew at an annual rate of only 0.6 percent from January through March, the Commerce Department said.
Bloggers are asking: Where's the recession? A rule of thumb for a recession -- often cited in news reports -- is two consecutive quarters of negative GDP.
But the National Bureau of Economic Research's Business Cycle Dating Committee -- accepted by most economists as the official recession arbiters -- looks beyond GDP to identify economic setbacks. In fact the last official recession declared by the NBER -- in 2001 -- included only one quarter of shrinking GDP. In 2001 there were two negative quarters, but they weren't consecutive. Output shrank in the first quarter, but that was mostly before the official recession began in March. Then output grew at a 1.2 percent annual rate in the 2nd quarter. In the 3rd quarter the economy gave all that up and more. In the fourth quarter -- right after 9/11, interestingly -- output grew at a 1.6 percent annual rate. NBER declared the recession over in November.
NBER also looks closely at employment, which shrank sharply in 2001 and is shrinking now. The U.S. job base has now shrunk for three months in a row, starting in January. This Friday we'll get the preliminary report for April. In 2001 and 2002 -- an economic downturn considered mild by many economists -- the job base shrank for 15 months straight.
UPDATE: Barry Ritholtz says it's totally a recession because the government's inflation measures are flawed. By underestimating inflation, he says, the Commerce Department is overestimating economic growth. (Bean counters try to strip inflation out of their calculations to get the "real" amount of output increase.) So if you include a better inflation measure, output really did shrink in the fourth quarter and the first quarter.