An economic watchdog says a U.S. recession officially began in February, breaking from the standard practice of applying the recessionary label only after two consecutive quarters of decline.
On Monday, 100-year-old nonprofit National Bureau of Economic Research (NBER) said expert economics on its business cycle dating committee determined that the coronavirus pandemic and public health response have resulted in a “downturn with different characteristics and dynamics than prior recessions.”
Despite the unusual circumstances, “the unprecedented magnitude of the decline in employment and production, and its broad reach across the entire economy, warrants the designation of this episode as a recession, even if it turns out to be briefer than earlier contractions,” NBER added.
Economic growth peaked and plummeted in February, NBER said, ending a 128-month expansion that began in June 2009—the longest-such U.S. streak dating back to 1854. A 120-month stretch running from March 1991 to March 2001 held the previous record.
The business cycle dating committee takes into account broad checks on employment and production activity in making their determination that a recession has started. The committee views the payroll employment measure as the most reliable comprehensive estimate of employment. That hit a peak in February before the pandemic upended the market.
Because the data is based on a survey that counts as employed individuals who are paid but not at work, the NBER committee also reviewed the employment measure from Bureau of Labor Statistics, whose data checks exclude individuals who are paid but on furlough. And it concluded that both data sets were consistent with a business cycle that peaked in February. It also relied on data from the Bureau of Economic Analysis regarding estimates of real gross domestic product and of real gross domestic income. Both also hit a clear peak in February.
NBER’s committee determined that while the monthly peak occurred in February, the quarterly peak in economic activity arrived in 2019’s fourth quarter.
Eight university-affiliated economists on the committee reviewed the data and determined that the U.S. economy is in a recession. As of Jan. 1, NBER said its membership included 1,581 researchers from 180 institutions.