Was 2001 slowdown really a recession?

WASHINGTON – The government released revised figures for the gross domestic product Friday that showed that, under one standard definition of a recession, the 2001 downturn doesn’t qualify.

Private economists who reviewed the new data, however, said they still believe the country did suffer a recession that year, although an even milder one in GDP terms than previously believed.

Under revised data released by the Commerce Department’s Bureau of Economic Analysis, the GDP did not decline for three consecutive quarters in 2001 as the old data had showed. In fact, the GDP didn’t post consecutive declines at all.

The new data show that the GDP fell at an annual rate of 0.5 percent in the first quarter of 2001, then rose at an annual rate of 1.2 percent in the second quarter and fell again at a rate of 1.4 percent in the third quarter.

The old data had the GDP falling at annual rates of 0.2 percent in the first quarter, 0.6 percent in the second quarter and 1.3 percent in the third quarter.

That would fit the often-cited definition of a recession as a downturn in economic activity represented by at least two consecutive quarters of falling GDP.

It also matched the period in which the National Bureau of Economic Research, the recognized arbiter of recessions, said the country was in a slump, which it dated as starting in March 2001 and ending in November of that year.

That would put the start of the recession two months after Bush took office. The president and others in his administration have argued that the recession began earlier. They note that last year’s GDP revision showed economic output had registered its first decline in the third quarter of 2000, during former President Clinton’s administration, falling at a rate of 0.5 percent.

“The decline in the economy began well before the president took office,” Treasury Secretary John Snow said in an interview Friday with a radio station in Fargo, N.D., repeating an argument the administration has been using that Bush inherited a recession.

The question of whether a recession took place – and when it began – is certain to gain added importance as both Bush and Sen. John Kerry, his Democratic challenger, clash over economic policies in the remaining weeks before the Nov. 2 election.

The National Bureau of Economic Research panel said in January it was examining whether it had made mistakes in the dates it chose for the last recession, but private economists said Friday they doubted the new data would change the decision to call the 2001 slowdown a recession.

The revisions to the GDP released Friday were part of the BEA’s annual update that cover the past three years to reflect more complete source data.