Why the National Bureau of Economic Research Says the Economy is in Recovery

Below is a solid explanation by Josh Zumbrun at WSJ on how the NBER does its magical work. Do keep in  mind though that this "recovery" as per most "recoveries," where a central bank influences monetary policy, is about central bank interest rate manipulation of the business cycle. The NBER and WSJ will never tell you this.

A common reaction to any story mentioning economic recovery goes something like this: “On what planet are you living? The economy is terrible.” The sentiment is so common that a Wall Street Journal/NBC News poll last month showed 57% of respondents feel the economy remains in recession.

The difference between economists and public surveys boils down to terminology. TheNational Bureau of Economic Research, the semi-official arbiter of recessions in the U.S., defines recessions as periods when a significant decline in economic activity, spread across the economy, lasts more than a few months, as measured by real gross domestic product, real income, employment, industrial production and retail sales.

Their analysis of when a recovery starts looks for turning points: when unemployment stops climbing, when growth stops plunging, when industrial production starts rising again. Their turning points mark troughs in the economy so if the recession is particularly severe, as it was in 2007-09, the unemployment rate can remain very high for years after the official “recovery” started.

As this chart shows, recessions generally cover the period during which the unemployment rate is climbing. They do not cover the entire period during which the unemployment rate is high.

In the current recovery, which began in June 2009, the unemployment rate has remained quite high, although it has clearly stopped climbing. Its current level of 6.7% is the highest at this stage of any recovery in the modern era. Thus a recovery, but one that’s far from pleasant, and enduringly painful for large swaths of the population