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. Last Updated: 07/27/2016

NBER: U.S. Recession Started Back in March

WASHINGTON -- It's official. The National Bureau of Economic Research announced Monday that the United States entered a recession in March, the month in which the longest expansion in U.S. history celebrated its 10th anniversary.

The committee, composed of academic economists from prestigious universities, posted its decision on its web site. It ruled that the long expansion ended in March and the 10th U.S. recession since the end of World War II began at the same time.

Even though it dated the start of the recession as March, the NBER panel said a full-blown downturn still might have been avoided if not for the Sept. 11 terrorist attacks.

"Before the attacks, it is possible that the decline in the economy would have been too mild to qualify as a recession," the group said in a statement.

The group's decision means the longest expansion lasted exactly 10 years. The previous record for uninterrupted economic growth was set in the 1960s, a period of eight years and 10 months lasting from February 1961 to December 1969.

At the White House, U.S. President George W. Bush pledged, "We will do everything we can to enhance recovery."

The president called on Congress to move quickly to pass an economic stimulus bill so that he will be able to "sign it before Christmas."

But Senate Majority Leader Tom Daschle said it was the Republicans who were using obstructionist tactics by refusing to compromise on the outlines of a stimulus bill. The Democrats are seeking more spending for low-income Americans, while Republicans are pushing for a package with a large dose of tax relief for corporations. "Now is not the time to play politics with our economy and security," Daschle said.

Many economists believe that both sides will find a way to compromise on a stimulus package of around $100 billion. They say that amount -- combined with the large individual tax cuts approved last spring, and aggressive credit easing by the Federal Reserve -- will guarantee an economic rebound by midyear.

The NBER panel is composed of six economists including Martin Feldstein, who served as chairman of former U.S. President Ronald Reagan's Council of Economic Advisers.

"The NBER's Business Cycle Dating Committee has determined that a peak in business activity occurred in the U.S. economy in March 2001," the panel said in its announcement. "A peak marks the end of an expansion and the beginning of a recession."

Many economists, however, believe the present downturn will turn out to be short and mild.

Of course, they hasten to add that this favorable forecast hinges on a big unknown -- whether there will be more terrorist attacks.

"We are keeping our fingers crossed. We think it is going to be a mild recession," said David Wyss, chief economist at Standard & Poor's in New York. "But that assumes nothing else goes wrong, and there is a lot that could go wrong."

Analysts said all bets would be off if terrorists were to succeed at staging some type of replay of the horrors of Sept. 11.

Gerald Cohen, an economist at Merrill Lynch in New York, said he believes the current downturn will end by March of next year and be followed by an economic boom in the last six months of next year.

"Massive monetary and fiscal stimulus should lead to 5 percent growth in the second half of 2002," he predicted.

A March end to the recession would mean the current downturn will last 12 months, close to the 11-month average for the 10 previous recessions since World War II.

Wyss also said he was looking for a mild recession. He predicted the current downturn would reduce the country's total output by 1 percent, less than the 2.5 percent average loss in gross domestic product for the 10 previous recessions.

In June 1999 the Federal Reserve began raising interest rates out of concern that the long economic boom was threatening to unleash higher inflation. But with mounting signs that the economy was threatening to stall, the Fed reversed course last January.

With a recession officially declared, analysts point to a number of signs that recovery should be around the corner, including a big jump in retail sales in October and a rebounding stock market.

Asha Bangalore, an economist at Northern Trust of Chicago, said these and other indicators were pointing to "happy tidings of a recovery" in early 2002.