The United States economy fell into recession last year, according to the National Bureau of Economic Research.
Its Business Cycle Dating Committee determined that a peak in economic activity occurred in the U.S. economy in December 2007.
“The peak marks the end of the expansion that began in November 2001 and the beginning of a recession,” says a statement from the NBER. “The expansion lasted 73 months; the previous expansion of the 1990s lasted 120 months.”
The NBER doesn’t define a recession as two consecutive quarters of declining gross domestic product. Instead, it considers a recession to be a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators.
“Because a recession is a broad contraction of the economy, not confined to one sector, the committee emphasizes economy-wide measures of economic activity,” according to a statement. “The committee believes that domestic production and employment are the primary conceptual measures of economic activity.”
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U.K. Pensions Jump Back into Surplus
Accounting deficits for the 200 largest privately sponsored pension plans in the U.K. improved by £38 billion (C$69.7 billion) in November, the largest single monthly rise on record.
According to Aon Consulting, this translates into a surplus of £23 billion for these plans, suggesting that current economic conditions present opportunities as well as risks for employers and trustees.
The Aon200 Index, which tracks the 200 largest privately sponsored U.K. pension plan accounting deficits, shows that the overall funding position improved from a deficit of £15 billion at the end of October to a surplus of £23 billion by the end of November. According to Aon, the abrupt turnaround is due to falling expectations of future inflation, which has fallen to 2.6% from 3.2% in the past month.
Aon points out that 2008 has been a year for the record books, witnessing 21 daily swings of £10 billion or more in pension asset values (compared to only six between 2001 and 2007).
This year has also seen the largest year on year fall in pension plan asset value, with values falling £80 billion, the largest drop in any year since pension plans were formed in the middle of the last century.
Projected inflation reached a record high of 4.2% in July, the highest level since pension accounting was introduced in its current form 2001. Inflation then fell dramatically to lower levels than the beginning of the year, saving final salary plans £45 billion.