Wait Till Next Year

Although many people consider a two-quarter downturn of gross domestic product to be a recession, the designation of recessions is done by the business-cycle dating committee of my organization, the National Bureau of Economic Research. The bureau defines a recession as a significant decline in economic activity spread across the economy and lasting more than a few months. In judging whether the economy is in recession, the committee looks at monthly data on real income, employment, industrial production, and wholesale and retail sales.

Because monthly data for December won’t be available until next year, we cannot be sure whether the economy has turned down. The measure of personal income for October suggests that the economy may have peaked and begun to decline, but the data for employment and industrial production in November and for sales in October show continued growth.

My judgment is that when we look back at December with the data released in 2008 we will conclude that the economy is not in recession now.

There is no doubt, however, that the economy is slowing. There is a substantial risk of a recession in 2008. Whether that occurs will depend on a variety of forces, including monetary policy and a possible fiscal stimulus.

— Martin Feldstein, a professor of economics at Harvard and the president of the National Bureau of Economic Research.