July 16, 2013

This Explains a Lot: How and Why NBER Made Its Recession Call

Filed under: Economy,Scams,Taxes & Government — Tom @ 9:03 am

As shown in my most recent PJ Media column, the most recent recession, using criteria developed by the National Bureau of Economic Research, began in June 2008.

That of course is not what the NBER actually determined. For “some reason,” the group came up with December 2007.

Since the data doesn’t support that call, the obvious question is how NBER came to its decision.

I have a clue, which I stumbled across last night.

It’s in Christina Romer’s Wikipedia entry:

She is a former vice president of the American Economic Association, a John Simon Guggenheim Memorial Foundation Fellowship recipient, a fellow of the American Academy of Arts and Sciences, and a winner of the Berkeley Distinguished Teaching Award. Professor Romer is co-director of the Program in Monetary Economics at the National Bureau of Economic Research, and was a member of the NBER Business Cycle Dating Committee until she resigned from this position on November 25, 2008.

Christina Romer was nominated to be President-in-waiting Obama’s Chairman of his Council of Economic Advisers on November 24, 2008. She certainly knew that her nomination was coming well in advance, and how politically helpful tagging the recession’s inception at as early a date as possible would be.

NBER issued its recession call on December 1, 2008. Here is who participated in the deliberations, and when (bold is mine):

Committee members participating in the decision were: Robert Hall, Stanford University (chair); Martin Feldstein, Harvard University and NBER President Emeritus; Jeffrey Frankel, Harvard University; Robert Gordon, Northwestern University; James Poterba, MIT and NBER President; David Romer, University of California, Berkeley; and Victor Zarnowitz, the Conference Board. Christina Romer of the University of California, Berkeley, resigned from the committee on November 25, 2008, and did not participate in its deliberations of November 28.

I think it’s reasonable to contend that Christina Romer heavily influenced the detailed research the committee reviewed on November 28, and that her husband’s presence at the Black Friday 2008 (cough, cough) “deliberations” helped to ensure that the committee made its erroneous December 2007 call.

As I noted in the column:

The timing of the recession’s inception is no trifle. NBER’s call less than a month after the 2008 presidential election made the breezy, now well-established meme that we should “blame Bush for everything” a fixture in the left’s rhetorical toolbox.

I contend that the call was clearly heavily influenced by Barack Obama’s incoming lead economist.

Continuing:

… As I see it, NBER, regardless of its alleged stated “nonpartisan” nature and regardless of the fact that a few of its leaders might be considered center-right economists, has little if any defense against a charge that in determining that the recession began in December 2007, it acted no differently than a bunch of left wing-coopted tools.

Even less than I thought.

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