Until I read this, I was all but sure that the NBER's Business Cycle Dating Committee was going to call the trough in December of 2001--say that that month was the end of the recession that started in March of 2001.

Now I don't know. And neither does the NBER's Business Cycle Dating Committee. They are waiting and seeing.

The NBER: According to the most recent data, the U.S. economy continues to experience growth in output but declines in employment. Real personal income has generally been growing over the past year, while employment fell significantly in both November and December 2002. Recent data confirm our earlier conclusion that additional time is needed to be confident about the interpretation of the movements of the economy last year and this year. The NBER's Business Cycle Dating Committee will determine the date of a trough in activity when it concludes that a hypothetical subsequent downturn would be a separate recession, not a continuation of the past one. The trough date will mark the end of the recession. The committee will not issue any judgment about whether the economy has reached a trough until it makes its formal decision on this point. The committee waits for many months after an apparent trough to make its decision, because of data revisions and the possibility that the contraction would resume. For example, the committee waited until December 1992 to announce that a trough had occurred in March 1991.

In November 2001, the committee determined that a peak in business activity occurred in the U.S. economy in March 2001. A peak marks the end of an expansion and the beginning of a recession. The determination of a peak date in March is thus a determination that the expansion that began in March 1991 ended in March 2001 and a recession began in March. The expansion lasted exactly 10 years and was the longest in the NBER's chronology.

A recession is a significant decline in activity spread across the economy, lasting more than a few months, visible in industrial production, employment, real income, and wholesale-retail sales. A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough. Between trough and peak, the economy is in an expansion. Expansion is the normal state of the economy; most recessions are brief and they have been rare in recent decades.Because a recession influences the economy broadly and is not confined to one sector, the committee emphasizes economy-wide measures of economic activity. The traditional role of the committee is to maintain a monthly chronology, so the committee refers almost exclusively to monthly indicators. The committee gives relatively little weight to real GDP because it is only measured quarterly.

The committee generally studies two monthly measures of activity across the entire economy: (1) employment and (2) personal income less transfer payments, in real terms (adjusted for price changes). In addition, the committee refers to two indicators with coverage primarily of manufacturing and goods: (3) the volume of sales of the manufacturing and wholesale-retail sectors adjusted for price changes and (4) industrial production. The Bureau of Economic Analysis of the Commerce Department compiles the first and the Federal Reserve Board the second. Because manufacturing is a relatively small part of the economy, the movements of these indicators often differ from those reflecting other sectors.

Although the four indicators described above are the most important measures considered by the NBER in developing its business cycle chronology, there is no fixed rule about which other measures contribute information to the process.

Figure 1 shows the recent movements of employment superimposed on the average movement over the past six recessions. Employment reached a peak in March 2001 and declined through April 2002. Current revised data show that employment rose slightly from May through October (with a slight decrease in September), then fell by 88,000 in November and 101,000 in December, the most recent reported month. Employment in December was only 29,000 above its lowest post-peak value, that of April 2002...