Glossary
NBER Business Cycle Dating Committee
The group of economists at the National Bureau of Economic Research that officially dates US recession peaks and troughs.
The NBER Business Cycle Dating Committee is a panel of academic economists at the National Bureau of Economic Research, a private, non-profit research organization, that determines when US recessions begin and end. Its dates are the ones the government, economists and historians use, even though the NBER is not a government agency. When someone says "officially in a recession," they usually mean the committee has declared one.
How the committee decides
The committee does not use the popular rule of two consecutive quarters of falling GDP. It looks for a significant decline in economic activity that is spread broadly across the economy and lasts more than a few months, judging depth, breadth and duration together. It weighs a range of monthly indicators, including real personal income less transfers, nonfarm payroll employment, household employment, real consumer spending, wholesale and retail sales, and industrial production, alongside quarterly GDP.
It dates two turning points: the peak, the last month of expansion, and the trough, the last month of contraction. The recession is the period between them.
Why the lag matters to investors
Because the committee waits for revised data, a recession is usually well underway, or over, before it is declared. Stock markets often bottom before the trough is even announced. That makes NBER dates useful for studying history but not for timing investments in real time.