Business Cycles and Economic Outlook

Business Cycles and Economic Outlook
1.   What data from the BEA announcement supports the NBER decision that the U.S. is in a recession?

Answer:
In December 2008 the National Bureau of Economic Research (NBER) declared that a recession had begun in the U.S. economy in December 2007.

A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators. A recession begins when the economy reaches a peak of activity and ends when the economy reaches its trough. Between trough and peak, the economy is in an expansion (NBER Recession Announcement, 2008)

Although the NBER's declaration that a recession had begun did not fit the commonly held definition of a recession, the overall economic conditions had deteriorated enough for the committee determined that the decline in economic activity in 2008 met the standard for a recession and that a recession had begun.   The 2008-2009 bears out the NBER's decision to call a business cycle peak and the beginning of a recession.  In addition, the U.S. unemployment rate doubled between January 2008 and November 2009.

The Bureau of Economic Analysis produces the national income and product accounts (NIPAs). These are a set of economic accounts that provide the framework for presenting detailed measures of U.S. output and income, which incorporate a vast amount of data from a variety of public and private sources.

The NIPAs provide information to help answer three basic questions. First, what is the output of the economy—its size, its composition, and its use? Second, what are the sources and uses of national income? Third, what are the sources of saving, which provides for investment in future production? The NIPA estimates are presented in a set of integrated accounts that show U.S. production, distribution, consumption, investment, and saving. The conceptual framework of the accounts is...