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Opinion
Justin Fox

Blame History, Not Biden, for Making Recession Calls So Hard

The National Bureau of Economic Research has been putting dates on downturns since 1929 — well before there was such a thing as gross domestic product.

Simon Kuznets, economist, Nobel Prize winner and father of the weird system for calling US recessions.

Simon Kuznets, economist, Nobel Prize winner and father of the weird system for calling US recessions.

Photographer: AFP via Getty Images

In March 1929, the National Bureau of Economic Research published its first estimate of the start and end dates of what it called “contractions” or “recessions,” going back to 1855. The private think tank, then based in New York, continued to assign dates to peaks and troughs of the US business cycle in subsequent years, while the NBER researcher who compiled the first set went on to design a system of national income accounts for the Commerce Department. In 1942 Commerce supplemented these for purposes of better understanding the wartime economy with a measure called gross national product, with regular quarterly reporting of GNP beginning in 1947.

If you’ve been wondering why recessions in the US are more or less officially determined by a panel of economists at NBER and not, as in many countries, by the simple rule-of-thumb of two consecutive quarters of declining real gross domestic product (which supplanted GNP as the headline economic growth metric in 1991 in the US and well before then elsewhere ), here’s the reason: Some guy at NBER was determining when recessions started and ended before GDP existed, after which he went on to help invent GDP.