Who died and made the National Bureau of Economic Research boss? During the past two days my in-box has been flooded by NEWS ALERT: RECESSION OFFICIALLY STARTED IN 2007 or some simulacra thereof. So who made the NBER the Supreme Court of recession calls? I asked them. The answer was not really confidence inspiring.
According to their press office, once upon a time the Department of Commerce published a newsletter called Business Dynamics (or something like that, she couldn’t remember the exact name), and business dynamics used to publish data on when recessions began and ended. One day, around 1962, the newsletter started publishing the recession data that they got from NBER instead of calculating their own.
That’s it. No executive order. No medal of honor. No national proclamation. Just a newsletter which the government used to publish, in which they printed the NBER’s recession bars. That’s what makes them official.
Now, the dictionary has a number of definitions of ‘recession’ the most well known (and precise) of which is: two consecutive quarters of negative GDP. I haven’t been able to find a dictionary which defines a recession as ‘whatever the NBER says it is.’
Intrade (which actually has to pay out on their calls) uses the classic dictionary definition; two negative quarters in a row.
I can see your emails flying towards me already: “What, Bowyer, you choose the betting parlors over the economics establishment?”
Yup—after all, the gamblers have had a much better record than the economists have lately.