The latest release from the Bureau of Economic Analysis, which includes the “advance” estimate of real GDP for the third quarter of 2010, indicates that the recession isn’t over, by my definition of a recession:
- two or more consecutive quarters in which real GDP (annualized) is below real GDP (annualized) for an earlier quarter, during which
- the annual (year-over-year) change in real GDP is negative in at least one quarter.
Real GDP for the third quarter was $13,260.7 billion (annualized rate, chained 2005 dollars). Although that’s better than the second quarter, it remains below the peak of $13,359.0, which was reached in the second quarter of 2008.
Here’s how real GDP has fared from the first quarter of 1947 through the third quarter of 2010 (recessions are denoted by vertical bars):
(In this version of the graph I have eliminated the 1947 recession, for lack of complete statistics, and pushed the beginning of the current recession to an earlier quarter.)
(I have added the following sentence and related graph.) Here’s a closer look at the depth and duration of post-war recessions:
Finally, here are year-over-year changes in real GDP, from the first quarter of 1948 through the third quarter of 2010:
This graph, by the way, updates the one I used in “The Price of Government: More Evidence,” where I say:
You will notice two things about the graph. First, the economy is cyclical, thanks in part to the actions of government (e.g., the low-interest, housing-bubble recession). Second, economic growth has declined from an annual rate of around 4 percent to an annual rate of about 2 percent, because of government.