No one indicator is used to determine a recession. Rather, it’s a group of people, called the Business Cycle Dating Committee. WSJ explains how this group decides when the U.S. has entered a recession, and why knowing that date is so important. Illustration: Jacob Reynolds WSJ Glossary Markets and economics are complex. It's easy to be overwhelmed by a sea of wonky indicators and lose track of why they matter. This series breaks down the basic terms and ideas that move the markets. #Recession #Economy #WSJ...(read more)
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In the realm of economics, a recession is defined as two consecutive quarters of negative economic growth. But who decides when a recession officially begins? That responsibility falls to the National Bureau of Economic Research's Business Cycle Dating Committee, a little-known group of economists based in Cambridge, Massachusetts. Unlike other government agencies or organizations that track economic indicators, the committee doesn't release frequent reports or provide regular updates on the state of the economy. Instead, it operates behind the scenes and only announces the beginning and end of recessions after the fact. The committee was created in 1978, during a period of high inflation and economic instability, in order to provide a more objective and scientific approach to dating business cycles. Each member of the committee is chosen for their expertise in business cycle analysis and appointed by the president of the NBER. The current chair of the committee is Robert Hall, a professor of economics at Stanford University. In order to determine when a recession begins, the committee analyzes a variety of economic data such as gross domestic product, income, employment, industrial production, and retail sales. They also take into account any other factors that may be affecting the economy, such as natural disasters, major policy changes, or global events. Once the committee determines that the economy has entered a recession, they typically announce it several months after the fact. This is because it takes time to collect and analyze all of the relevant economic data, and the committee wants to make sure they have a complete picture of the situation before making a formal announcement. So why does it matter when the committee declares a recession? For one, it can help to guide policy decisions by government officials and central bankers. If the committee announces that the economy is in a recession, it may prompt policymakers to take action in order to mitigate the effects of the downturn. It can also provide valuable information for investors and businesses. When a recession is officially declared, it can be a signal for investors to adjust their portfolios and for businesses to prepare for a slowdown in demand. While the committee's role in determining when a recession begins may seem small, it can have a significant impact on the broader economy. By providing an objective and scientific analysis of the business cycle, the committee helps to guide policymakers, investors, and businesses through periods of economic uncertainty. https://inflationprotection.org/the-wsj-shedding-light-on-the-obscure-committee-that-determines-the-beginning-of-a-recession/?feed_id=89328&_unique_id=643fda0e9c457 #Inflation #Retirement #GoldIRA #Wealth #Investing #2008recession #areweheadingintoarecession #areweinarecession #bnecon #businesscycle #businesscycledatingcommittee #economicactivity #economicdecline #economists #economy #employment #gdp #GlobalRecession #grossdomesticproduct #income #industrialproduction #peaks #recession #recession2023 #recessionfears #recessionstartdate #recessiontrends #sales #startofrecession #troughs #unemployment #unemploymentrates #USrecession #whatisarecession #wsj #wsjglossary #RecessionNews #2008recession #areweheadingintoarecession #areweinarecession #bnecon #businesscycle #businesscycledatingcommittee #economicactivity #economicdecline #economists #economy #employment #gdp #GlobalRecession #grossdomesticproduct #income #industrialproduction #peaks #recession #recession2023 #recessionfears #recessionstartdate #recessiontrends #sales #startofrecession #troughs #unemployment #unemploymentrates #USrecession #whatisarecession #wsj #wsjglossary
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