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Is U.S. facing depression? Bureau won't say

December 05, 2008|Martin Zimmerman | Zimmerman is a Times staff writer.

Now that the "R" word is officially out of the closet, can the "D" word be far behind?

The National Bureau of Economic Research, the august body that serves as a thermometer for the U.S. economy, confirmed Monday what many already suspected: We're in a recession and have been for a year.

But as the economic crisis has deepened this fall, analysts and business executives increasingly have raised the prospect that we're headed for a depression. The most recent example came Wednesday, when a top Chrysler executive told Congress that the failure of a major U.S. automaker could "trigger a depression."

If so, don't expect the National Bureau of Economic Research to give us a head's up when it happens.

"It's just not a part of the business-cycle-dating process that the NBER has been involved in," a spokeswoman for the bureau said.

According to the bureau's website, "The NBER does not separately identify depressions. The NBER business cycle chronology identifies the dates of peaks and troughs in economic activity. We refer to the period between a peak and a trough as a contraction or a recession, and the period between the trough and the peak as an expansion."

The entry goes on to point out that the contraction in economic activity from 1929 to 1933 is considered the worst in U.S. history. Real gross domestic product declined 27% during that time, the bureau notes, roughly 10 times as much as in the worst postwar recession.

That slough of despond is often called the Great Depression. Others apply the term to the entire decade of the 1930s, contending that it took the industrial ramp-up that preceded America's entry into World War II to pull the country out of its economic doldrums.

It's a debate the NBER has no intention of entering.

"Just as the NBER does not define the term depression or identify depressions, there is no formal NBER definition or dating of the Great Depression," the bureau's website says.

But if another depression comes, chances are we'll know it when we see it.

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martin.zimmerman@latimes.com

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