July 16, 2010

Heads, Obama Wins; Tails, Bush Loses: AP’s Inconsistent ‘Recession’ Definition

recessionThere are two different ways of defining a recession. The Associated Press is using one of them to define its beginning, and the other to define its end. Using the former makes George Bush look bad; using the latter makes Barack Obama look good. Imagine that.

The traditional definition of “recession,” which is used as the official metric in the vast majority of countries around the world, is that it is “a decline in Gross Domestic Product (GDP) for two or more consecutive quarters.” Using that metric, the U.S. recession began in July 2008, the first month of the first quarter during which economy contracted, and ended in June 2009, the last month of the final of four consecutive quarters of contraction. Positive economic growth resumed during the third quarter of 2009.

The other definition of “recession” is “a period of economic contraction as defined by the National Bureau of Economic Research (NBER).” For reasons I’ll never understand, but which I believe have their origins in political considerations, the government ceded the “official” definition of “recession” to the NBER several decades ago, moving this metric from the purely objective realm to the clearly subjective.

The NBER says that the recession began in December of 2007. Three months ago, it said that it was unable, based on available data, to declare that the recession has ended, even though nine months had already passed since it did so under the traditional definition. My guess is that the group will declare the recession’s end shortly, and that it will say it ended in the latter part of 2009. But until we hear otherwise, the recession as the NBER defines it is not over, and those who have been using this definition cannot yet defensibly pretend that it is over.

The Associated Press is among those who are indefensibly pretending.

A Google News Archive search on [crutsinger "began in December 2007"] (typed exactly as indicated between brackets) returns 49 examples in which Mr. Crutsinger employed the NBER’s definition of when the recession began.

A Google News Archive search on ["Associated Press" recession "began in December 2007"] (again typed exactly as indicated between brackets) returns roughly 190 examples where the wire service used the NBER’s definition or contributed to reports that did.

There are likely many more similar but inaccessible examples residing behind the AP’s and other media outlets’ subscription walls.

So imagine my surprise (I’m kidding; sadly, this is as predictable as the sunrise) when I found that Crutsinger, in a co-authored report with the wire service’s David Wagner about weakening economic indicators, told readers that the recession ended last year:

Manufacturing cools in June as recovery slows

New evidence of a slowing economic rebound emerged Thursday in reports that manufacturing activity is slowing after helping drive the early stages of the recovery.

Factory output fell in June, according to a government report on industrial production. It was the sharpest monthly drop in a year. And two regional manufacturing indexes sank this month.

Production of automobiles, home-building materials and processed food all fell in June. The data sent stocks falling.

Federal Reserve officials took note of the weakening recovery when they met last month and lowered their forecast for economic growth, according to minutes released Wednesday.

Manufacturing helped boost the economy last year when the recession ended and has since been one of the strongest sectors in the recovery.

Since I don’t think anyone at NBER has whispered this into Martin’s ear, I have to believe that he decided to change his definition of “recession” now that a struggling Democrat occupies the White House.

Since Crutsinger decided to move to the traditional definition of a recession in declaring its end, you might think that other recent AP reports have moved its beginning to July 2008. Don’t be silly.

Keeping the recession’s beginning at the NBER’s December 2007 starting point serves as a subtle but constant reminder to readers that it all began under the eeeeeevil George W. Bush, even though second quarter 2008 growth was positive, and even though tax collections reached a “Supply-Side Stunner” all-time high in April 2008.

That’s why on Friday, just one day after Crutsinger’s “recession has ended” report appeared, the AP’s Christopher Rugaber, in a story covering the sharp declines in job openings reported by the Labor Department, stuck with the NBER’s starting point:

Job openings drop in May as hiring stays weak

Job openings dropped in May from the previous month and layoffs edged up, fresh evidence that employers are reluctant to add workers.

The decline in job openings comes after a sharp rise the previous two months, driven by temporary government hiring for the 2010 census and more openings in the private sector. As a result, the number of available jobs has rebounded since the depths of the recession but remains well below pre-recession levels.

The Labor Department said Tuesday that job openings fell to 3.2 million in May from 3.3 million in the previous month. April’s upwardly revised figure was the highest in 18 months.

The department’s report, known as the Job Openings and Labor Turnover survey, illustrates how competitive the job market is. There were about 4.7 unemployed people, on average, for each job opening in May. That’s down from the peak of 6.3 last November, but is much higher than the 1.8 unemployed per opening when the recession began in December 2007.

Heads, Obama and Democrats win. Tails, Bush and Republicans lose. That’s “journalism” at the Associated Press.

Cross-posted at NewsBusters.org.



  1. There is no official definition of a recession. Only NBER’s Business Cycle Dating Committee calls recessions. Strictly speaking, it is subjective, but it is almost objective as it can be reproduced by about three statistical series. The committee bases its opinion on monthly data. The “2 quarters no-growth” definition is an older approximation to the committee’s definition, useful because no non-mechanical monthly estimates of GDP are available.

    But, yes, use the NBER dates or the 2 quarter definition, not both.

    Comment by Frank — July 17, 2010 @ 10:54 am

  2. #1, There is a technical definition of a recession, and it’s the two-quarter variety:

    A significant decline in activity spread across the economy, lasting longer than a few months. It is visible in industrial production, employment, real income, and wholesale-retail trade. The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country’s GDP.

    Comment by TBlumer — July 17, 2010 @ 2:05 pm

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