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US 2001 Slump May Not Have Been Recession at All
Jul 30, 8:46 AM (ET)
By Tim Ahmann
WASHINGTON (Reuters) - Not only was the U.S. recession in 2001 the shallowest on record, it may not have been one at all -- at least in the classic sense of two straight quarterly declines, new government data show.
In annual revisions to U.S. gross domestic product numbers released on Friday that could fuel a politically charged debate, the Commerce Department rewrote the history of the recent downturn by revising away a decline in the second quarter of 2001.
The new figures, which reflect more complete source data, show economic activity peaked in the second quarter of 2001, not the fourth quarter of 2000.
Measured from the new peak, the economy shrank just 0.4 percent, keeping the recession as measured by GDP the mildest on record. The 1969-1970 recessionary period, in which the economy contracted 0.6 percent, comes in a close second.
The National Bureau of Economic Research, the unofficial but accepted arbiter of U.S. recessions, has said the downturn began in March 2001 and ended in November of that year.
However, the White House has argued that the economy peaked earlier and has contended President Bush inherited the recession from his predecessor, President Bill Clinton.
Now, some might argue there was no recession at all.
"If I were describing this, I'd say it's essentially a flat period," said Brent Moulton, who is in charge of compiling the GDP data at the department's Bureau of Economic Analysis.
WHAT A HEADACHE!
The revisions left intact a drop in GDP in the third quarter of 2000 and a rise in the final months of that year. In addition, the data still show a slight contraction in the first quarter of 2001 and a deeper one in the third quarter.
But in what one official called "probably the most noteworthy" of the revisions, the economy now appears to have expanded at a 1.2 percent annual rate in the second quarter, as opposed to the 0.6 percent decline shown in earlier data.
The revision, which reflected a larger buildup in business inventories than previously thought amid fewer imports, left the economy with a zig-zag pattern as GDP slipped in three quarters out of five, but not in two consecutive ones.
"Exactly dating where the peak in the business cycle is is very difficult now given the sort of saw-toothed pattern that we now see," Moulton said.
BEA Director Steve Landefeld steered clear of offering reporters any further guidance. "These things are so charged," he said. "This is part of the reason we don't do business-cycle dating, the NBER does it."
The NBER's recession-dating panel, a group of top-flight academic economists, examines a wider range of indicators of the economy's health than just GDP, in part because the GDP data are often revised.
While the latest revisions, which updated information going back to the fourth quarter of 2000, changed the complexion of the 2001 recession, officials characterized the changes overall as quite modest.
Over the 2000-2003 period, the U.S. economy advanced at a sluggish annual rate of 1.9 percent, the same as in the unrevised data.
Jul 30, 8:46 AM (ET)
By Tim Ahmann
WASHINGTON (Reuters) - Not only was the U.S. recession in 2001 the shallowest on record, it may not have been one at all -- at least in the classic sense of two straight quarterly declines, new government data show.
In annual revisions to U.S. gross domestic product numbers released on Friday that could fuel a politically charged debate, the Commerce Department rewrote the history of the recent downturn by revising away a decline in the second quarter of 2001.
The new figures, which reflect more complete source data, show economic activity peaked in the second quarter of 2001, not the fourth quarter of 2000.
Measured from the new peak, the economy shrank just 0.4 percent, keeping the recession as measured by GDP the mildest on record. The 1969-1970 recessionary period, in which the economy contracted 0.6 percent, comes in a close second.
The National Bureau of Economic Research, the unofficial but accepted arbiter of U.S. recessions, has said the downturn began in March 2001 and ended in November of that year.
However, the White House has argued that the economy peaked earlier and has contended President Bush inherited the recession from his predecessor, President Bill Clinton.
Now, some might argue there was no recession at all.
"If I were describing this, I'd say it's essentially a flat period," said Brent Moulton, who is in charge of compiling the GDP data at the department's Bureau of Economic Analysis.
WHAT A HEADACHE!
The revisions left intact a drop in GDP in the third quarter of 2000 and a rise in the final months of that year. In addition, the data still show a slight contraction in the first quarter of 2001 and a deeper one in the third quarter.
But in what one official called "probably the most noteworthy" of the revisions, the economy now appears to have expanded at a 1.2 percent annual rate in the second quarter, as opposed to the 0.6 percent decline shown in earlier data.
The revision, which reflected a larger buildup in business inventories than previously thought amid fewer imports, left the economy with a zig-zag pattern as GDP slipped in three quarters out of five, but not in two consecutive ones.
"Exactly dating where the peak in the business cycle is is very difficult now given the sort of saw-toothed pattern that we now see," Moulton said.
BEA Director Steve Landefeld steered clear of offering reporters any further guidance. "These things are so charged," he said. "This is part of the reason we don't do business-cycle dating, the NBER does it."
The NBER's recession-dating panel, a group of top-flight academic economists, examines a wider range of indicators of the economy's health than just GDP, in part because the GDP data are often revised.
While the latest revisions, which updated information going back to the fourth quarter of 2000, changed the complexion of the 2001 recession, officials characterized the changes overall as quite modest.
Over the 2000-2003 period, the U.S. economy advanced at a sluggish annual rate of 1.9 percent, the same as in the unrevised data.
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