Do you know who officially determines when the U.S. economy is in a recession?
Many people believe a large drop in the stock market, a significant decline in economic output or high unemployment means we are in a recession. But who officially determines when the U.S. economy is in a recession?
The federal government collects an enormous amount of economic and financial statistics. So, does anyone at the federal government level make this decision? No, the president and Congress have nothing to do with it. How about this quasi-government institution called the Federal Reserve (Fed), led by chairman Alan Greenspan? No again. The Fed has a large arsenal of weapons to stop a recession, and some people believe it can start one too; but no. Give up? The Business Cycle dating Committee of the National Bureau of Economic Research (NBER), an economic think tank, decides whether we are in recession by evaluating economic indicators.