If This Is a Recession, We Might Not Know for Months
Economy’s second-straight decline in output sparks debate—and the waiting game
GDP, change from previous quarter
Financial crisis
Covid-19 recession
Other recessions
2001 recession
40
%
30
20
10
0
–10
–20
–30
–40
1980
'90
2000
'10
'20
Other
Recessions
2001
recession
Financial
crisis
Covid-19
recession
40
%
30
20
10
0
–10
–20
–30
–40
1980
'90
2000
'10
'20
2001
recession
Financial
crisis
Covid-19
recession
Other recessions
40
%
30
20
10
0
–10
–20
–30
–40
1980
'90
2000
'10
'20
Other
Recessions
2001
recession
Financial
crisis
Covid-19
recession
40
%
30
20
10
0
–10
–20
–30
–40
1980
'90
2000
'10
'20
Other
Recessions
Financial
crisis
40
%
30
2001
recession
Covid-19
recession
20
10
0
–10
–20
–30
–40
1980
'90
2000
'10
'20
As the Federal Reserve continues to raise interest rates in its fight against the highest inflation in more than four decades, economic indicators flash signs of a slowdown and questions abound over what is a recession and whether the U.S. has entered one.
U.S. gross domestic product fell by an inflation and seasonally adjusted annual rate of 0.9% in the second quarter, the Commerce Department said Thursday. It was the economy’s second-consecutive quarterly contraction, which is one definition of recession, though not the one used by the official arbiter, the National Bureau of Economic Research.
The nonprofit academic group’s Business Cycle Dating Committee tracks an array of measures in addition to GDP to identify the timing of peaks and troughs within cycles of economic activity. These peaks and troughs represent transitions between economic expansions and contractions.
We often don’t know when a recession begins or ends until months later, when the committee makes the call.
The group takes a deliberate, retrospective approach in making these announcements to avoid the need for revisions. Since the committee was created in 1978, there have been six recessions. The starts to the downturns have been announced from four months to a year after they happened.
The end of recessions in some cases have taken longer to call. As with peaks, the committee tends to wait a number of months to identify a trough after it has occurred.
Duration of recessions since 1980, with timing of announcements
1980 RECESSION
1981-82 RECESSION
1990-91 RECESSION
Start
Jan. 1980
July
1981
July
1990
Start
announced
June 1980
Jan.
1982
April
1991
End
July 1980
March
1991
Nov.
1982
End
announced
July 1981
July
1983
Dec.
1992
2001 RECESSION
2007-09 RECESSION
COVID-19 RECESSION
March 2001
Dec. 2007
Feb. 2020
June
2020
Nov.
2001
April
2020
Dec.
2008
Nov.
2001
July
2021
June
2009
July
2003
Sept.
2010
Note: Announcements are plotted by the month in which they were made, not the precise date.
Source: National Bureau of Economic Research
Duration of recessions since 1980, with timing of announcements
1980 RECESSION
1981-82 RECESSION
1990-91 RECESSION
Start
Jan. 1980
July
1981
July
1990
Start
announced
June 1980
Jan.
1982
April
1991
End
July 1980
March
1991
Nov.
1982
End
announced
July 1981
July
1983
Dec.
1992
2001 RECESSION
2007-09 RECESSION
COVID-19 RECESSION
March 2001
Dec. 2007
Feb. 2020
June
2020
Nov.
2001
April
2020
Dec.
2008
Dec.
2001
July
2021
June
2009
July
2003
Sept.
2010
Note: Announcements are plotted by the month in which they were made, not the precise date.
Source: National Bureau of Economic Research
Duration of recessions since 1980, with timing of announcements
1980 RECESSION
1981-82 RECESSION
1990-91 RECESSION
Start
Jan. 1980
July
1981
July
1990
Start
announced
June 1980
Jan.
1982
April
1991
End
July 1980
March
1991
Nov.
1982
End
announced
July 1981
July
1983
Dec.
1992
2001 RECESSION
2007-09 RECESSION
COVID-19 RECESSION
March 2001
Dec. 2007
Feb. 2020
June
2020
Nov.
2001
April
2020
Dec.
2008
Nov.
2001
July
2021
June
2009
July
2003
Sept.
2010
Note: Announcements are plotted by the month in which they were made, not the precise date.
Source: National Bureau of Economic Research
Duration of recessions since 1980,
with timing of announcements
1980
RECESSION
1981-82
RECESSION
1990-91
RECESSION
Start
Jan.
1980
July
1981
July
1990
Start
announced
June 1980
Jan.
1982
April
1991
End
July
1980
March
1991
Nov.
1982
End
announced
July 1981
July
1983
Dec.
1992
2001
RECESSION
2007-09
RECESSION
COVID-19
RECESSION
March
2001
Dec.
2007
Feb.
2020
June
2020
Nov.
2001
April
2020
Dec.
2008
Nov.
2001
July
2021
June
2009
July
2003
Sept.
2010
Note: Announcements are plotted by the month
in which they were made, not the precise date.
Source: National Bureau of Economic Research
Duration of recessions since 1980,
with timing of announcements
1980
RECESSION
1981-82
RECESSION
1990-91
RECESSION
Start
Jan.
1980
July
1981
July
1990
Start
announced
June 1980
Jan.
1982
April
1991
End
July
1980
March
1991
Nov.
1982
End
announced
July 1981
July
1983
Dec.
1992
2001
RECESSION
2007-09
RECESSION
COVID-19
RECESSION
March
2001
Dec.
2007
Feb.
2020
June
2020
Nov.
2001
April
2020
Dec.
2008
Nov.
2001
July
2021
June
2009
July
2003
Sept.
2010
Note: Announcements are plotted by the month
in which they were made, not the precise date.
Source: National Bureau of Economic Research
There have been 34 recessions since 1857, ranging in length from more than five years to the pandemic-driven contraction of 2020 that lasted two months.
Past recessions since 1857, sorted by duration
Start date
Months
0
12
24
36
48
60
October 1873
43 months
The Great Depression
August 1929
March 1882
April 1865
January 1910
September 1902
January 1913
1857-1979
June 1857
June 1869
1980-2022
December 1895
June 1899
January 1920
18 months
Financial crisis
December 2007
January 1893
November 1973
July 1981
May 1923
March 1887
May 1907
October 1926
May 1937
November 1948
December 1969
July 1890
July 1953
April 1960
October 1860
February 1945
August 1957
July 1990
8 months
2001 recession
March 2001
August 1918
January 1980
2 months
Covid-19 recession
February 2020
Start date
Months
0
12
24
36
48
60
October 1873
43 months
The Great Depression
August 1929
March 1882
April 1865
January 1910
September 1902
January 1913
1857-1979
June 1857
June 1869
1980-2022
December 1895
June 1899
January 1920
18 months
Financial crisis
December 2007
January 1893
November 1973
July 1981
May 1923
March 1887
May 1907
October 1926
May 1937
November 1948
December 1969
July 1890
July 1953
April 1960
October 1860
February 1945
August 1957
July 1990
8 months
2001 recession
March 2001
August 1918
January 1980
2 months
Covid-19 recession
February 2020
Start date
Months
0
12
24
36
48
60
October 1873
43 months
The Great Depression
August 1929
March 1882
April 1865
January 1910
September 1902
January 1913
1857-1979
June 1857
June 1869
1980-2022
December 1895
June 1899
January 1920
18 months
Financial crisis
December 2007
January 1893
November 1973
July 1981
May 1923
March 1887
May 1907
October 1926
May 1937
November 1948
December 1969
July 1890
July 1953
April 1960
October 1860
February 1945
August 1957
July 1990
8 months
2001 recession
March 2001
August 1918
January 1980
2 months
Covid-19 recession
February 2020
Start date
Months
0
12
24
36
48
60
October 1873
August 1929
March 1882
April 1865
43 months
The Great Depression
January 1910
September 1902
January 1913
1857-1979
June 1857
June 1869
1980-2022
December 1895
June 1899
January 1920
18 months
Financial crisis
December 2007
January 1893
November 1973
July 1981
May 1923
March 1887
May 1907
October 1926
May 1937
November 1948
December 1969
July 1890
July 1953
April 1960
October 1860
February 1945
August 1957
July 1990
8 months
2001 recession
March 2001
August 1918
January 1980
2 months
Covid-19 recession
February 2020
Start date
Months
0
12
24
36
48
60
October 1873
August 1929
March 1882
April 1865
43 months
The Great Depression
January 1910
September 1902
January 1913
1857-1979
June 1857
June 1869
1980-2022
December 1895
June 1899
January 1920
18 months
Financial crisis
December 2007
January 1893
November 1973
July 1981
May 1923
March 1887
May 1907
October 1926
May 1937
November 1948
December 1969
July 1890
July 1953
April 1960
October 1860
February 1945
August 1957
July 1990
8 months
2001 recession
March 2001
August 1918
January 1980
2 months
Covid-19 recession
February 2020
Recessions have become more infrequent in recent decades. There have been just three since the start of the century.
U.S. recessions
Covid-19 recession
1860
'70
'80
'90
1900
'10
'20
'30
'40
'50
'60
'70
'80
'90
2000
'10
'20
Source: Federal Reserve Bank of St. Louis
U.S. recessions
Covid-19 recession
1860
'70
'80
'90
1900
'10
'20
'30
'40
'50
'60
'70
'80
'90
2000
'10
'20
Source: Federal Reserve Bank of St. Louis
U.S. recessions
Covid-19 recession
1860
'70
'80
'90
1900
'10
'20
'30
'40
'50
'60
'70
'80
'90
2000
'10
'20
Source: Federal Reserve Bank of St. Louis
U.S. recessions
Covid-19 recession
1860
1900
2000
'20
Source: Federal Reserve Bank of St. Louis
U.S. recessions
Covid-19 recession
1860
1900
2000
'20
Source: Federal Reserve Bank of St. Louis
The NBER’s definition of a recession isn’t cut-and-dried and leaves room for interpretation. The group loosely defines it as a “significant decline in economic activity that is spread across the economy and lasts more than a few months,” a phrase that can be shortened to three single-word criteria: “depth, diffusion and duration.”
The 2020 recession was the shortest on record and didn’t quite check the third box of “more than a few months,” with a peak occurring in February 2020 and a trough just two months later.
NBER ultimately concluded that the severity of conditions related to the first two criteria—the “depth” and “diffusion”—offset the relative lack of duration. The decline in economic activity early in the pandemic had been “so great and so widely diffused throughout the economy that, even if it proved to be quite brief, the downturn should be classified as a recession.”
NBER assesses a range of indicators in making calls about the beginning and end of business cycles. They include employment, personal income, consumer spending, manufacturing and industrial production, as well as GDP.
Over the past year, growth has slowed in personal income and also manufacturing, a trend roughly similar to those in the 12-month periods preceding the past three recessions.
Economic indicators for the 12 months preceding each recession compared with the most recent 12 months
Real personal income, change from a year earlier*
Real manufacturing and trade Industries sales, change from a year earlier†
6
%
6
%
12 months preceding the 2001
recession
4
2001
2007–09
Most recent
12 months
4
2
2007–09
0
2
2020
–2
2020
–4
0
1
6
12
1
6
12
MONTHS
Real personal income, change from a year earlier*
Real manufacturing and trade Industries sales, change from a year earlier†
6
%
6
%
12 months preceding the 2001
recession
4
2001
2007–09
Most recent
12 months
4
2
2007–09
0
2
2020
–2
2020
–4
0
1
6
12
1
6
12
MONTHS
Real personal income, change from a year earlier*
Real manufacturing and trade Industries sales, change from a year earlier†
6
%
6
%
12 months preceding the 2001
recession
4
2001
2007–09
Most recent
12 months
4
2
2007–09
0
2
2020
–2
2020
–4
0
1
6
12
1
6
12
MONTHS
Real personal income, change from a year earlier*
12 months preceding the 2001
recession
6
%
Most recent
12 months
4
2007–09
2
2020
0
1
6
12
MONTHS
Real manufacturing and trade Industries sales, change from a year earlier†
6
%
4
2001
2007–09
2
0
2020
–2
–4
1
6
12
Real personal income, change from a year earlier*
12 months preceding the 2001
recession
6
%
Most recent
12 months
4
2007–09
2
2020
0
1
6
12
MONTHS
Real manufacturing and trade Industries sales, change from a year earlier†
6
%
4
2001
2007–09
2
0
2020
–2
–4
1
6
12
Growth remains relatively strong in other areas, such as industrial production, which is above levels in the run-ups to the past three recessions. The number of people employed also has grown faster than it did in those periods, though it remains below prepandemic levels.
Economic indicators for the 12 months preceding each recession compared with the most recent 12 months
Industrial production, change from a year earlier
Employment level,
change from a year earlier
6
%
8
%
12 months preceding the 2001
recession
Most recent
12 months
6
4
4
2
2007–09
2001
0
2
–2
2020
2020
2007–09
–4
0
1
6
12
1
6
12
MONTHS
Industrial production, change from a year earlier
Employment level,
change from a year earlier
6
%
8
%
12 months preceding the 2001
recession
Most recent
12 months
6
4
4
2
2007–09
2001
0
2
–2
2020
2020
2007–09
–4
0
1
6
12
1
6
12
MONTHS
Industrial production, change from a year earlier
Employment level,
change from a year earlier
6
%
8
%
12 months preceding the 2001
recession
Most recent
12 months
6
4
4
2
2007–09
2001
0
2
–2
2020
2020
2007–09
–4
0
1
6
12
1
6
12
MONTHS
Industrial production, change from a year earlier
8
%
12 months preceding the 2001
recession
Most recent
12 months
6
4
2
2007–09
0
–2
2020
–4
1
6
12
MONTHS
Employment level,
change from a year earlier
6
%
4
2001
2
2020
2007–09
0
1
6
12
Industrial production, change from a year earlier
8
%
12 months preceding the 2001
recession
Most recent
12 months
6
4
2
2007–09
0
–2
2020
–4
1
6
12
MONTHS
Employment level,
change from a year earlier
6
%
4
2001
2
2020
2007–09
0
1
6
12
On Wednesday, Federal Reserve Chairman Jerome Powell told reporters that he doesn’t believe the U.S. is in a recession. He pointed to strength in the labor market, saying, “2.7 million people hired in the first half of the year, it doesn’t make sense that the economy would be in recession.”
Mr. Powell made the remarks a day before the release of the GDP report, but said that subsequent readings can diverge from initial estimates. “Generally the GDP numbers do have a tendency to be revised pretty significantly,” he said. “You tend to take first GDP reports with a grain of salt.”
Write to Andrew Barnett at andrew.barnett@dowjones.com and Ming Li at ming.li@wsj.com