IN EARLY 2002, not six months after the terrorist attacks, various economists declared the recession dead. Long live the expansion, they said. But don't feel bad if you missed the boom of 2002.
Even the official judges of U.S. recessions aren't so sure that the last downturn ended in December 2001, when many analysts believed it did. In fact, they aren't sure it ever ended.
Much of the betting on Wall Street these days has to do with the possibility of an economic "double dip," a new crater that begins just over the lip of the last one. But the premise that that last one did end may be as valid as a WorldCom IOU.
Instead, this may be Month 23 of the longest downturn since the 1930s and almost the fourth-longest U.S. slump on record.
Last week the National Bureau of Economic Research, a private group in Cambridge, Mass., that is charged with measuring business cycles for academics and policy-makers, declined yet again to proclaim an end to the recession that began in March 2001.Of course, the group isn't sure that the recession didn't end, either. It likes to take its time figuring these things out, waiting for the best data and making sure what appears to be a new trend has legs. For example, the bureau didn't announce the demise of the recession that ended in March 1991 until December 1992.
Even so, there is a decent chance that the bureau will eventually decide that we, in February 2003, are in recession, and that it is the same recession that started in March 2001. You wouldn't think so from looking at the economic output figures, however.
The gross domestic product - the inflation-adjusted value of the nation's goods and services - rose 2.4 percent last year, according to the latest readings. That's not great, but it's not terrible. In 1993 the economy grew only 2.7 percent, and the National Bureau chalked it up as a downshift in a continuing expansion.
The rough-and-ready rule for identifying recessions when you see them is to look for at least two quarters of falling gross domestic product. There were no quarterly GDP dips in 2002. The last quarterly GDP decline came in the third quarter of 2001 - at the time of the terrorist attacks.
In the first quarter of 2002 the economy grew at strapping annual rate of 5 percent; in the third quarter it grew at a rate of 4 percent. Although growth slowed to a rate of 0.7 percent at the end of the year, it sure doesn't look like a continuous recession from this angle.
But gross domestic product is not the only indicator considered by the National Bureau, or even the main one. Under the influence of Stanford University's Robert E. Hall, who has been the chairman of the bureau's Business Cycle Dating Committee since 1978, and longtime member Victor Zarnowitz, the group looks more closely at job growth than at any other marker.
And, owing to productivity improvements that allow higher output per employee, job growth has been terrible.
U.S. employment has fallen in 16 of the 22 months since March 2001, and it fell most months last year before an upturn in January. The economy has shed 1.7 million jobs in less than two years, and now supports fewer jobs than it did three years ago.
While employment losses have moderated in recent months, there has been no significant upturn in job creation that would prompt the National Bureau to declare a new expansion.
Like the slump of the early 1990s, which displayed similarly mixed signals, this rough patch is forcing the bureau to choose sides. What is the essence of the economy? Is it value of the car washes, refrigerators and lawyering we crank out every day? Or is it the number of people required to produce those things?
So far, the bureau has focused on the people, which should please those who argue for more consideration of the human element in economic indicators. Some have even suggested that the GDP should be replaced by a broader indicator of societal wellness that includes statistics on the environment and poverty.
But this is a fringe view, and some economists believe that even the National Bureau's preference for job figures over GDP data is wrongheaded. Labor is merely one input in the economic puzzle, they argue. Any measure of economic cycles worthy of the name ought to concentrate on output - that is to say, GDP, they contend. And GDP is up.
But if you're one of the 1.7 million who lost his/her job, this probably looks like a recession.