Economy on Track but Joblessness Is Growing; Arbiter of Recessions Says Productivity Best Gauge
Byline: Patrice Hill, THE WASHINGTON TIMES
The official arbiter of recessions yesterday declared the recession over in a decision that relies heavily on reports showing uninterrupted economic growth since the end of 2001, despite a slump in manufacturing and employment that continues.
The decision makes the current recovery the first in U.S. history to witness a major hemorrhaging of jobs - with nearly a million jobs lost since the official end of the recession in November 2001. It already has surpassed the so-called "jobless recovery" of the early 1990s in severity.
The National Bureau of Economic Research, which by tradition has determined the beginnings and ends of recessions since it was established in 1920, said the best measure of the economy's performance has been the Commerce Department's quarterly estimates showing that the gross domestic product has expanded by 4 percent in an uninterrupted, if fitful, recovery since the third quarter of 2001.
The emphasis on the quarterly growth figures is a shift from earlier committee procedures of relying on more frequent monthly indicators that continue to show a loss of jobs and industrial output.
The shift appears to have been driven by both the unique nature of the 2001 recession and recovery and evolutionary changes in the economy.
But it comes at a time when rising unemployment, which last month hit a nine-year high of 6.4 percent, has become the focus of political debate.
Stanford University economist Robert Hall, chairman of the bureau's business-cycle-dating committee, said the decision was not politically motivated.
Rather, he said the committee historically has put more emphasis on measures of output than employment.
The committee said economic growth has been possible, despite job losses totaling more than 2.5 million since the beginning of the recession in March 2001, because of unusually high productivity gains. Those productivity gains enabled workers to increase their take-home pay, and the increase in incomes nurtured growth in spending and the economy.
The panel cautioned that by declaring that the recession ended in November 2001, it is not saying "economic conditions since that month have been favorable or that the economy has returned to operating at normal capacity."
Most economists believe the economy has failed to achieve a sustainable recovery, although they almost unanimously agree that the recession ended in late 2001. The problem, they say, is a stubborn weakness in corporate spending and hiring.
As recently as March and April, the economy appeared close to falling into recession again, Federal Reserve Chairman Alan Greenspan testified on Wednesday. …