U.S. Economy Officially in Recession
It’s official. The United States economy has been in a recession for roughly one year. According to a statement from the National Bureau of Economic Research:
…a peak in economic activity occurred in the U.S. economy in December 2007. The peak marks the end of the expansion that began in November 2001 and the beginning of a recession. The expansion lasted 73 months; the previous expansion of the 1990s lasted 120 months… A recession begins when the economy reaches a peak of activity and ends when the economy reaches its trough. Between trough and peak, the economy is in an expansion.
The Wall Street Journal notes that, if the recession lasts beyond April 2009, it will be the longest recession since the Great Depression. The 1990-1991 and 2000-2001 economic downturns lasted 8 months apiece, and the major downturns in the 1970s and 1980s lasted 16 months apiece. The good news is that we’re already 12 months in, so hopefully things will start looking up soon. Until then, I hope you have a recession-proof job.
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Filed under: Economy
About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!
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5 Responses to “U.S. Economy Officially in Recession”
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December 2nd, 2008 at 2:30 pm
Meh. The economy has been jumping up and down over the past few months but it hasn’t been plummeting in a while. I see only positive growth over the next several years barring any craziness from our government. The growth in sales over Black Friday is a good sign that things are starting to turn around.
December 2nd, 2008 at 3:07 pm
It’s crazy that they had to officially announce it today, like no one knew. I was listening to the radio this morning and heard an interesting fact. Since WWII, no recession has lasted over 16 months. If you start at last Dec, we are at month 12, do you think we have 4-5 months left? some predict the summer, some a few years, how do we know for sure?
December 2nd, 2008 at 3:14 pm
The fact that they came out and officially stated it was a recession doesn’t change much. People know times are tough for them, they don’t need economists to tell them that. They could have discovered that the economy was expanding, and I still don’t think that would have changed much for people.
December 2nd, 2008 at 7:00 pm
woohoo! yippy! let’s party! god, it’s about time, i was sick of hearing over and over again that we are going into recession, we may be in a recession, we are probably in a recession. it was tiresome.
December 2nd, 2008 at 8:21 pm
According to Keynes, the root cause of an economic downturns is an insufficient aggregate demand. When the total demand for goods and services declines, businesses throughout the economy see their sales fall off. Lower sales induce firms to cut back production and to lay off workers. Rising unemployment and declining profits further depress demand, leading to a feedback loop with a very unhappy ending. 90% of the time you can make statistics show whatever you want 50% of time.