March 10, 2008

March 10, 2008
By Richard C. Young

Recession Update

The National Bureau of Economic Research (NBER), under the leadership of Martin Feldstein, is the official arbiter of the U.S. business cycle. NBER defines a recession as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.” I have written that, for many, 2008 will have the feel of a depression. And as events have unfolded in early March, I feel even more focused on my reading.

The Friday, March 7 report of a 63,000 job loss (preliminary) lends a new level of concern regarding the start of recession. The charts in my soon-to-be-released Intelligence Report clearly did not indicate the onset of recession as of most reliable and recent data. It is certainly possible a recession designation will be signaled with the release of the current month’s complete data. Data revisions are a regular occurrence, thus compounding the difficulty of accurately pinpointing the onset of recession. But I cannot emphasize enough the negative nature of the preliminary jobs report. It would be a rush to judgment, however, to designate a new period of recession until noted NBER factors, including industrial production, begin to turn negative. I will update you following the release of latest industrial production numbers at mid month.

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