NBER Declares Recession

The National Bureau of Economic Research -- the private, nonprofit and nonpartisan research organization that dates business cycles -- announced today that the U.S. recession began in December 2007, the date widely believed to be the start date.

The NBER indicates on its website that of the 10 recessions since 1945, their average duration was 10 months, with the longest lasting 16 months from July 1981 to November 1982. The recession of 1980 lasted six months beginning in January of that year, which makes the period 1980-1982 notable.

The longest recession of the 20th century lasted 43 months, from August 1929 to March 1933. However, the Depression marked only the second-longest recession in U.S. history, with the longest lasting 65 months from October 1873 to March 1879.

Risk assets such as equities and corporate bonds historically have tended to begin recovering in the middle of recessions, which to some would make the current period seem a safe time to begin buying. But the depth and the duration of the current recession remains overly unclear and will delay a meaningful recovery in risk assets.

Only when the deterioration in the economy halts will investors look over the valley and ignore bad news, facilitating sustainable rallies in risk assets. This hasn't happened yet -- economic data continue to worsen.

Data need not get better to spark a rally; they need only stop getting worse.

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Tony Crescenzi is the chief bond market strategist at Miller Tabak + Co., LLC, and advises many of the nation's top institutional investors on issues related to the bond market, the economy and other macro-related issues. At the request of the Federal Reserve, Crescenzi is a regular participant in the board's Livingston Survey of economic forecasters. He is also the author of the revised investment classic, The Money Market. first published in 1978 by Marcia Stigum, and The Strategic Bond Investor. At the time of publication, Crescenzi or Miller Tabak had no positions in the securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Crescenzi also is the founder of Bondtalk.com, a popular Web site covering the bond market and the economy. Crescenzi appreciates your feedback; click here to send him an email.

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