Last December 5, I saw a change in consumer behavior. Christmas shoppers suddenly regretted spending so much and started to buy gift certificates for people who were left on their lists. After Christmas, shoppers who received the gift certificates skipped the sales and saved the gift certificates to spend on necessities.
The National Bureau of Economic Research (NBER), the most authoritative source on the ups and downs of the U.S. economy, has now confirmed that a recession began last December.
The current recession has already lasted longer than most. Prior to this one, only two recessions in the period since the Great Depression have lasted 12 months or longer. The energy crisis recession of 1973–1975 and the Reagan Recession of 1981–1982 each lasted 16 months from peak to trough, as measured by NBER. The current recession would have to hit bottom in March to avoid running longer, and that’s an outcome that looks unlikely when viewed from where we are now.
Marking the economic peak a year ago suggests that the current recession was not caused primarily by the real estate decline, as many have supposed, but by rising energy and food prices.