Cambridge Office To Decide If Country Is In Double-Dip Recession
BOSTON (CBS) - Ask your friends, your neighbors, or your family if we're in a double-dip recession, and you're likely to hear the same response: "Yes." In fact, plenty of people would argue we never left the original recession. But it's the answer Jim Poterba gives you that matters most. And there's the problem.
He says he can't tell.
"It's way early for the process the NBER applies to make any determination where we are right now," according to Poterba, the NBER's president.
WBZ-TV's Jim Armstrong reports
The NBER is the National Bureau of Economic Research. Based in Cambridge, it is the one and only office with the power to decide when the country is in - and out - of a recession.
It's not done at the White House and not done on Wall Street; the official word comes out of a third floor office in a non-descript building on Mass Ave.
U.S. politicians decided back in 1961 that they want nothing to do with defining when the economy hits the skids, so they let a team of independent economists do the dirty work.
And so the NBER's number-crunchers study mountains and mountains of data, much of conflicting. The housing market may fall as the Dow rises. Unemployment goes up, consumer confidence falls. Initial numbers get revised in both directions.
"We have a committee of nine academic researchers who try to make a determination of when the peak and the trough took place," Poterba explains.
But that determination only comes after the fact. Meaning by the time the NBER announces we're in a recession - double-dip or otherwise - we've already been there for a while, and may even be on our way out. The agency looks backward, not forward. When they announced the country was in recession back in November, 2008, they noted it had begun in December of the previous year.
"We do not forecast, we do not attempt to predict whether the U.S. economy is about to go into recession or not," he says. "The downside of what we do is that it's frustrating when people say tell me what's happening today."
That subjects the NBER's work to criticism, but the group's job is to write economic history. What they decide goes in the history books and will eventually form the foundation of future studies. So, from their perspective, there's no rush.
"It's still very premature to try to assess where we are at the moment," he concludes.
