It's (Almost) An Official Recession

Jeffrey Frankel directs the program in International Finance and Macroeconomics at the National Bureau of Economic Research, where he is also a member of the Business Cycle Dating Committee. The committee is the deliberative body that officially declares recessions. He writes:

The weight of evidence is now overwhelming: We are currently in recession.

His full analysis is here. Notice how he looks at data, unemployment, GDP etc., to see what is going up and what is going down, but says nothing about a business cycle and what might cause an economic downturn. Notice, further, how he is totally befuddled by the strength in the economy earlier this year:

The rate of change of real GDP, surprisingly, was above zero in the first quarter of 2008, and was even moderately strong in the second quarter: 2.8%. (The revised “final” estimate of GDP in the fourth quarter of 2007 did turn out to be below zero, but just barely.) It is quite a mystery why output pointed up during the first half of the year, while everything else pointed down.

And although a version of money supply, "real" money supply is one of the leading economic indicators, there is no mention, by Frankel, as to dating a recession when Bernanke first slammed the breaks on money growth earlier this year. That would explain why GDP just turned down in Q3, before that it was just a sector specific regulatory downturn.

A member of the group that dates the beginning and end of recessions doesn't have a business cycle theory, for him it is just data falling from the sky. Amazing. Even more amazing is that most other members of the Business Cycle Dating Committee are probably just as uninformed.