Whither the Global Economic Recovery?

The recovery in the US (and global) economy is hale and hearty.

Amidst deep economic gloom, I had written in April 2009 that the US and world economies would show strong signs of recovery by July 2009 (see here and here). Ensnared in the tentacles of what was thought at the time to be another great depression (see opinions expressed by Robert Reich and Paul Krugman - both saying that another Great Depression was upon us), experts and eminent economists believed at the time that recovery wouldn't begin until 2010 at the earliest.

As this guest column I've written in CEO World magazine shows, data released by the US Bureau of Economic Analysis strongly suggests the recovery began in July 2009. Research released by the OECD (Organization for Economic Cooperation and Development) on April 12th 2010 shows the US economy has been in recovery since mid-2009, and in "expansion" (which denotes robust growth) since December 2009. Uber-guru Alan Greenspan also believes that the economic recovery began in July 2009.  

It thus appears at first sight somewhat baffling that the Business Cycle Dating Committee (BCDC) of the NBER has chosen to announce on Monday that they're unable to affix a date to the end of the recession that began December 2007. Reporting on this, here's what the Wall Street Journal had to say:

"The committee of academic economists that dates the beginning and end of U.S. recessions stopped short of calling an end to the downturn that started in December 2007, drawing public criticism from a committee member who pushed for decisive action. Most members of the National Bureau of Economic Research's Business Cycle Dating Committee have said the recession probably ended in mid-2009, when several key economic indicators reached their trough and the economy started growing again". 

Similarly, other leading news sources have said the following on Monday (April 12th 2010):

The Guardian:  "Many experts believe the recession, which officially began in December 2007, may have ended as early as June or July last year".

AFP: "Most economists believe the economy turned the corner to expansion between June and August of 2009".

TIME magazine: "Lots of economists think that the recession probably ended sometime last summer".

Thus the correct way to report the NBER committee's statement is not as "the recession is not yet over" (as several reputed news sources have wrongly put it), but as "the committee is not ready to say when the recession ended " as the AP has said it.

But why has the BCDC chosen to take such a safe stance (particularly when, as the WSJ reports above, most of it’s members have individually said they believe the recession ended in mid-2009)? There was even a dissenting opinion expressed by Robert Gordon of Northwestern University, who believed the committee should have declared that the recession ended in June 2009.

Clearly the ultra-conservative BCDC is not willing to stick it's neck out as a small probability of a double dip remains. The BCDC is essentially an entity that certifies the beginnings and ends of economic cycles after the fact (usually long after the fact !).

Remember the BCDC declared an end to the last recession in July 2003, giving the date of the recession’s end as November 2001 - 20 months earlier. The body also did not signal that a recession had begun in December 2007 until November 2008  - AFTER the crash of September 2008, when most of the economic world had sunk firmly into palpable gloom. To be fair, this conservativeness is only justified, as their word is "official" and they can't afford to issue revisions on such an important matter.