Recession Declared “Official”, Began in December 2007

A group that officially classifies economic cycles said Monday that the U.S. economy is in recession, and that it has been since December 2007.

The nonpartisan, nonprofit National Bureau of Economic Research, a group of economists that declares business cycles, said that the economy peaked in December 2007 and has been sliding downhill ever since. Although the textbook definition of recession – two consecutive quarters of GDP contraction -- hasn’t been realized yet, the NBER said “the subsequent decline in economic activity was large enough to qualify as a recession.”

Ironically, the quarter in which the NBER said the economy peaked – the fourth quarter of 2007 – was one of two of the past four quarters to see negative GDP growth.

Most economists expect contraction in both the current fourth quarter of 2008 and the first quarter of 2009. If the recession drags out any longer than that, it will be a historically long downturn.

The average recession since World War II has lasted 10 months. The recessions in the early to mid 1970s and the early 1980s both lasted 16 months. After that, the most recent prolonged downturn was the Great Depression, which lasted 43 months.