The Advent of the American Recession

J. Bradford DeLong

December 2001





  • The NBER determined that the U.S. economy peaked in March 2001, and has been in recession since.
  • The NBER examines four variables:
    • employment
    • industrial production
    • manufacturing and trade sales
    • personal income
  • In this current recession these four indicators are pointing in different directions. This is not a usual recession--where all of the major indicators show that a business cycle peak has been reached within a very few months of each other.
    • Sales reached a peak in August of 2000.
    • Industrial production has been declining since September 2000.
    • Employment has been declining since March 2001.
    • And incomes continue to rise.
  • This time, therefore, any dating of the business cycle peak and the recession is exceptionally hazardous.
  • Indeed, the failure of the major indicators to show their standard business cycle-peak pattern raises questions about whether "business cycle theory" provides a good way to understand what is going on.

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