WASHINGTON - In case you haven't heard, it's official. The recession is over.
The National Bureau of Economic Research, a private nonprofit group based in Cambridge, Mass., is expected to announce today that the economy is out of the pits and on the mend. Sources said the proclamation of good tidings will come from the business cycle dating committee, a seven-member panel of academic economists headed by Martin Feldstein, the bureau's president and chief executive officer.
Government figures show the economy has been growing for more than a year and a half after falling into recession in the third quarter of 1990. The retraction in U.S. output continued through the first quarter of 1991 before reversing course and edging up.
However, the economics profession leaves it to the research bureau to officially date the high and low points of all business cycles. The announcement expected today could help boost public spirits a little bit as consumers embark on last-minute Christmas shopping, analysts said.
The news also comes as President-elect Bill Clinton considers how much action he will take to stimulate the economy.
"I think there'll be some help to business and consumer confidence," said David Hale, chief economist for Kemper Securities Inc. in Chicago. "But it's a small impact, and it comes so late that most businesses and consumers are already looking forward to what is going to happen with Clinton."
Moreover, said Hale, the economy remains hobbled with long-term financial problems that include a banking system that is reluctant to lend, high real interest rates, and rising federal deficits.
The bureau's panelists previously proclaimed that the recession began in July 1990. The time frame they will mark as the end of the recession was not known yesterday, but Hale predicted it will be the first quarter of 1991.
That would fit neatly with the government figures prepared by the Commerce Department, which in July released revised estimates showing gross domestic product fell 1.6% in the third quarter of 1990, 3.9% in the following quarter, and 3% in the first quarter of 1991.
The Commerce Department calculations also show that the economy officially began expanding in the third quarter of this year, meaning it had retraced all of the output lost during the recession. Third-quarter GDP rose 3.9%, according to last month's revised estimate, and a final estimate due today is expected to be similar.
The Cambridge group of economists uses the government reports on GDP to date the business cycles, along with government statistics on employment, personal income, and other measures of economic performance. Typically, the panel waits for some time before pronouncing a recession dead to make sure the recovery does not peter out.
Besides Feldstein, who is a professor of economics at Harvard University, members of the business cycle dating panel include William Branson of Princeton University, Benjamin Friedman of Harvard, Robert Gordon of Northwestern, Robert Hall of Stanford, Geoffrey Moore of Columbia, and Victor Zarnowitz of the University of Chicago.
Not everyone was crowing about the panel's expected findings. "Maybe they'll also announce who won the American League pennant in 1991," cracked Herbert Stein, a fellow at the American Enterprise Institute and formerly a member of the President's Council of Economic Advisers.
"I think it'll be generally misunderstood," said Stein. "They'll say the recession ended some time ago, and we've been recovering some time, but to say the recovery is now ended isn't to say everything is still wonderful. We still have fairly high unemployment."
It also is not saying much, Stein said, when U.S. GDP is now slightly above the level of two and a half years ago, before the recession began.