The U.S. economy isn’t officially in a recession until a specific group of eight economists from the National Bureau of Economic Research declares this to be the case.
Colloquially known as NBER, the National Bureau of Economic Research is a private non-profit organization that was established in 1920 by business and labour leaders, as well as university-based economists, to uncover and disseminate important facts about the economy.
NBER now consists of around 1,700 members who are experts in macroeconomics and business cycle research.
Those eight economists are the only members of the Business Cycle Dating Committee, which has no set meeting dates, unlike the Federal Reserve. The committee members are chosen by the NBER president, currently Massachusetts Institute of Technology (MIT) economist James Poterba, with no fixed membership terms.
The Dating Committee abides by a rather vague definition of a recession, which “involves a significant decline in economic activity that is spread across the economy and lasts more than a few months.”
The committee is notorious for taking so long to announce when a recession begins and ends, that the designations often come retroactively.
But, their recession designations are acknowledged and accepted by the U.S. government, businesses, investors and journalists.