IT’S OFFICIAL —- AND IT BEGAN LAST YEAR: Nation in a recession

It’s official —- though not exactly shocking.

After a modestly paced, six-year expansion, the nation’s economy entered recession last December —- the last month that the economy added jobs, the National Bureau of Economic Research said Monday.

This national downturn is already as long as those of 1990-91 and 2001 and shows signs of dragging through much of next year.

“The economy is really in a kind of freefall,” said Dean Baker, co-director of the Center for Policy and Economic Research, one of the few economists who warned years ago that a bursting of the housing bubble could pull the economy into recession. “All the data has been coming in more negative.”

For Georgians in particular, the NBER’s call is anticlimactic. Unemployment in the state recently hit its worst level since 1992, and Georgia’s job losses for the October-to-October period were fifth-worst in the nation. Meanwhile, the state’s manufacturers saw yet another dip in new orders in November, according to figures released Monday.

The NBER —- a private, nonprofit economic research organization that has become the quasi-official arbiter of business cycles —- defines recession as “a significant decline” across the economy.

Despite common misconception, recession does not always include two consecutive declines in gross domestic product —- although that box seems likely to get checked this time around: GDP declined 0.5 percent in the July-September quarter and the economy has slowed more since, said Adrian Cronje, Atlanta-based chief investment strategist of Wilmington Trust, a wealth- management company.

“This quarter’s numbers are going to be really hard,” he said. “Today, you have all the sectors of the economy really sputtering.”

Whether expansion is rekindled in a few months depends on the size and effectiveness of the stimulus the federal government delivers, he said.

“This is a recession in which the traditional ways of stimulating an economy won’t work,” he said. “It makes projections of GDP growth past the second quarter of next year pretty difficult.”

Since World War II, the nation has dipped into 10 other recessions. Two were as long as 16 months, one as short as six. They have averaged 10 months, according to the NBER.

The stock market has often signaled when a recession is about half over by starting to climb before economic growth begins, said Chris Dardaman, chief executive of Brightworth, an Atlanta-based wealth-management firm. And once the market turns, it rises an average of 44 percent in the next 12 months, he said.

So far, a series of rallies has fizzled. Monday it was even worse: the Dow Jones industrial average plunged, dropping nearly 8 percent of its value.

“I think the lows will be retested,” Dardaman said. “Maybe a month or two from now, we’ll know more.”

Before declaring a recession, the Cambridge-based NBER spends months examining data on production, manufacturing, income and jobs.

And while the various indicators have peaked at different moments, they mostly tell the same gloomy story.

Still, the most critical metric for the NBER is the job market. Payrolls have shed 1.2 million jobs this year while the official unemployment rate has climbed to 6.5 percent. Another month of losses is expected Friday when the government reports on November’s jobs.

Georgia has lost 61,000 jobs in the past 12 months while the jobless rate has risen to 7 percent.

On the state manufacturing front, an index for the sector compiled by the Kennesaw State University Econometric Center fell 1.3 points in November to 32.7.

Researchers compile the report by surveying about 70 manufacturers, including carpet makers, building supply companies and others. Each is asked about a series of components, and an index is calculated to express how many are rising and how many are falling. Below 50, the sector is believed to be contracting.

The index for new orders dropped two points, to 20.5.

Nationally, new orders are at their lowest point since 1980. Those trends point to a falling GDP this quarter, said Don Sabbarese, center director.

Job losses nationally and in Georgia have been widespread, with health care among the only sectors spared.

So for many job seekers and businesses, the NBER declaration of recession seems like a piercing glance into the obvious. Still, the NBER is supposed to resist a rush to judgment, argued one member of its business-cycle committee.

“Our job is to be definitive, not fast,” wrote economist Jeffrey Frankel of Harvard University’s Kennedy School on his blog Monday. “We leave it to others —- pundits, forecasters, consulting companies, financial newsletters, and so on —- to try to get there first. We deliberately get there last.”

 CHARLES W. JONES / Staff
RECESSIONS SINCE WORLD WAR II 
The United States has been in 11 recessions since World War II, the current one beginning in December 2007. 
Recession year (average length 1948-2001: 10.4 months)
Nov. 1948-Oct. 1949
July 1953-May 1954 
Aug. 1957-April 1958 
April 1960-Feb. 1961 
Dec. 1969-Nov. 1970 
Nov. 1973-March 1975 
Jan.-July 1980 
July 1981-Nov. 1982 
July 1990-March 1991 
March-Nov. 2001 
Dec. 2007-?

Timeline graph shows shaded blocks to mark recession years. 
Source: The National Bureau of Economic Research