MIT Economist James Poterba Helps Determine Recession Dates

James Poterba, an MIT economist, plays a vital role in determining the official start and end dates of recessions in the US for the NBER, a private research organization. Their findings provide crucial insights to guide policymakers and the public.

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Bijay Laxmi
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MIT Economist James Poterba Helps Determine Recession Dates

MIT Economist James Poterba Helps Determine Recession Dates

James Poterba, an economist at the Massachusetts Institute of Technology (MIT) and a member of the National Bureau of Economic Research's (NBER) Business Cycle Dating Committee, plays a vital role in determining the official start and end dates of recessions in the United States. The NBER, a private, non-profit, non-partisan organization dedicated to conducting economic research, relies on the expertise of Poterba and other committee members to identify the beginning and end of economic downturns.

As the current president and CEO of the NBER, Poterba is one of the key figures involved in this process. The committee's findings provide valuable insights into economic fluctuations and help inform future policy decisions. By carefully analyzing various economic indicators, such as the Conference Board Leading Economic Index (LEI), existing-home sales, manufacturing activity, and employment data, the committee can pinpoint the precise moments when a recession begins and ends.

Why this matters: Accurately identifying the start and end dates of recessions is critical for understanding the health of the economy and guiding policymakers in their decision-making process. The work of James Poterba and the NBER's Business Cycle Dating Committee provides a reliable and impartial assessment of economic conditions, which is essential for businesses, investors, and the general public.

Recent economic data from March 2024 suggests a mixed picture. The LEI decreased by 0.3 percent, indicating a contraction in the economy over the six-month period between September 2023 and March 2024. Existing-home sales also slipped, with declines in the Midwest, South, and West regions, but a rise in the Northeast. However, manufacturing activity continued to expand, and initial jobless claims remained unchanged from the previous week.

Treasury International Capital (TIC) data showed a net inflow of $51.6 billion in February 2024, with net foreign private inflows of $36.2 billion. Overall economic activity expanded slightly, with ten out of twelve Districts experiencing slight or modest growth. Mortgage applications increased 3.3 percent, and industrial production rose 0.4 percent in March, though it declined at an annual rate of 1.8 percent in the first quarter.

In a statement, James Poterba emphasized the importance of the committee's work, saying, "By carefully examining a wide range of economic indicators, we can provide a clear picture of the economy's performance and help policymakers, businesses, and individuals make informed decisions." The NBER's Business Cycle Dating Committee will continue to monitor economic data closely to identify any potential changes in the business cycle.

Key Takeaways

  • James Poterba, an MIT economist, plays a key role in determining US recession dates.
  • The NBER, a non-profit, relies on Poterba and others to identify economic downturns.
  • Accurate recession dates are critical for policymakers and the public to understand the economy.
  • Recent data shows mixed signals, with some indicators pointing to a contraction.
  • Poterba emphasizes the importance of examining a range of data to guide decision-making.