That’s a common rule of thumb, but not the definition.
> Some folks in the US are weirdly insistent that recessions are defined by the NBER
These people include the US Department of Labor’s Bureau of Labor Statistics [0] and the US Department of Commerce’s Bureau of Economic Analysis [1], among others. The US has used a tripartite definition where a recession has three required dimensions, “duration, depth, and diffusion”, for a long time; the 2-quarter-decline thing has long been cited as a guideline for the duration component, with separate rules of thumb sometimes cited for the other two. [2]
[0] https://www.bls.gov/spotlight/2012/recession/pdf/recession_b... – stating “the National Bureau of Economic Research (the official arbiter of U.S. recessions)”
[1] https://www.bea.gov/help/glossary/recession – stating “The designation of a recession is the province of a committee of experts at the National Bureau of Economic Research (NBER), a private non-profit research organization that focuses on understanding the U.S. economy.”
[2] See this about the BLS criteria from 1974: https://web.archive.org/web/20200325140941/https://www.nytim...
That isn't the unemployment graph of any recession I'm familiar with.
No, recessions are by definition “significant, widespread, prolonged” declines in economic activity [0]
[0] from https://www.investopedia.com/terms/r/recession.asp but the three dimensions are, with various terms, common (BLS and NBER use “duration, depth, and diffusion”, CD Howe Institute in Canada uses “pronounced, persistent, and pervasive decline in economic activity” [1].) The two-quarter-GDP-decline rule is a rule focussed on the prolonged/persistent/duration dimension, but which does not capture the other two dimensions.
[1] https://www.cdhowe.org/council-reports/canada-entered-recess...
Nobody defines a recession as a decline in employment. It's correlated, sure, but not the same thing.
No, GDP is one of many measures of activity in the economy.
Also, “significant, widespread, and prolonged” are important qualifiers, and quarterly GDP is relevant to at most two (significant and prolonged) of them.
> Nobody defines a recession as a decline in employment
Not employment alone, no. But income has long been recognized as part of the multidimensional set of indicators that determines recession.
The Congressional Research Service in a 2008 report wrote:
A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough. Between trough and peak, the economy is in an expansion. Expansion is the normal state of the economy; most recessions are brief and they have been rare in recent decades.
This is the generally accepted view among economists of what constitutes an economic recession. There is also a commonly cited "rule of thumb" that is referred to in the press. That rule is that a recession is two consecutive quarterly declines in real gross domestic product (GDP). But this rule does not always apply.
https://www.everycrsreport.com/files/20081215_R40052_72d3368...
In 1974, the BLS Commissioner provided this set of rules of thumb for the depth (“significant”), duration (“prolonged”), and diffusion (“widespread”) elements of recession; note that employment is a factor in two of the three elements, just like output (at the time, GDP had not yet replaced GNP as the preferred output measure):
In terms of duration—declines in real G.N.P. for 2 consecutive quarters; a decline in industrial production over a six‐month period.
In terms of depth—A 1.5 per cent decline in real G.N.P.; a 15 per cent decline nonagricultural employment; a two point rise in unemployment to a level of at least 6 per cent.
In terms of diffusion—A decline in nonagricultural employment in more than 75 per cent of industries, as measured over six‐month spans, for 6 months or longer.
https://web.archive.org/web/20200325140941/https://www.nytim...
Lemme know what you think after the actual recession hits in 6-24 months and if it feels or looks any worse.
They are private organization, they do not release their decision criteria publicly, and they were formed by random collection of academics that decided to start a club. They are entirely self-appointed.
> That's simply not true
Yes, it is.
> Policymakers may speak about NBER's findings, but there is no formal recognition of them in U.S. law.
Not all official government actions are done by Congress as law.
US Department of Commerce’s Bureau of Economic Analysis says “The designation of a recession is the province of a committee of experts at the National Bureau of Economic Research” [0]
US Department of Labor’s Bureau of Labor Statistics describes NBER as “the official arbiter of U.S. recessions” [1]
[0] https://www.bea.gov/help/glossary/recession
[1] https://www.bls.gov/spotlight/2012/recession/pdf/recession_b...
We are by the most common definition: two quarters of negative GDP growth.
Some folks in the US are weirdly insistent that recessions are defined by the NBER -- a self-appointed group of wonks at a private and secretive non-profit. But they're just one measure, and an arbitrary one at that.