Washington, Jan. 15 (Bloomberg) -- The U.S. recession may not be over after all. The private group of economists that says when economic downturns begin and end has backed away from its thinking since last May that an expansion may have started. The ``significant'' drop in employment in the last two months altered the panel's inclination. ``Recent data confirm our earlier conclusion that additional time is needed to be confident about the interpretation of the movements of the economy last year and this year,'' the Business Cycle Dating Committee of the National Bureau of Economic Research said on its Web site. The latest statement replaces one the six-member committee adopted in May and maintained through December. The group had said economic data were signaling the recession that began in March 2001 ``may have come to an end.'' The economy lost 101,000 jobs last month, the most since February, after losing 88,000 in November, the Labor Department said last week. That capped the first two years of back-to-back job losses since the 1950s.
``This kind of recovery is one that makes it extra hard for the committee to gauge the end of the cycle because they don't get a very clear message from the labor market as is traditionally the case'' following a recession, said Edward McKelvey, a senior economist at Goldman, Sachs & Co. in New York. ``This is the kind of problem they are going to face in cycles to come.''
Signs of Economic Weakness
The U.S. economy was ``sluggish'' from mid-November through early January because of weak consumer spending and a lack of job creation, the Federal Reserve said today in its latest regional economic survey, known as the beige book. Wholesale prices excluding food and energy fell 0.4 percent last year, the Labor Department reported today. It was the biggest drop since at least 1973 and part of the reason companies aren't spending enough to spur more growth. In December, that so-called core index of wholesale prices fell 0.3 percent. Production at New York state factories rose in January for a third month as orders kept expanding and shipments increased, the Federal Reserve Bank of New York said. The length of time goods sit on shelves stayed close to a record low in November, a Commerce Department report showed. Companies are reluctant to let stockpiles build until growth accelerates. The economists group tracks figures on payrolls, industrial production, sales adjusted for inflation, and incomes excluding transfer payments to help determine when the recession ended. It usually waits until these indicators breach their pre-recession peaks before calling an end to a contraction. It puts out a monthly update on its assessment of the economy.
Withholding Judgment
Last year, employment had been ``essentially constant until its significant decline in the past two months,'' the group said. Payrolls were 1.3 percent lower in December than the high reached at the start of the recession in March 2001. Production figures are also below their previous peaks, while income and sales are higher than before the recession. The committee maintained it would withhold judgment until it concludes ``that a hypothetical subsequent downturn would be a separate recession, not a continuation of the past one.'' In making that determination, ``we would have to reconcile the conflicting behavior'' of the four indicators it follows, the group said. In that regard it considers employment ``the single most reliable indicator.'' The group waited until December 1992 to determine that the economy had touched bottom in March 1991. Growth probably slowed to a 1.4 percent annual rate in the final three months of 2002, down from 4 percent in the third quarter, according to the consensus estimate of economists surveyed this month by the Blue Chip Economic indicators//www.quote.bloomberg.com