???The recent spell of government bailouts and disappointing quarterly reports has pointed to troubled times in the U.S., leading to many Americans losing jobs and banks scrambling to survive.
???UB researchers confirmed in November that New Yorkers were facing a recession before officials confirmed it on a national level on Monday. According to the New York Times, the Standard & Poor's 500-stock index decreased by close to 9 percent in six-and-a-half hours, the shortest time on record for such a drop.
???Drops more than 8 percent in stock markets typically take years to materialize, according to the International Herald Tribune.
???After the Thanksgiving weekend, the Dow Jones industrial average dipped 679.95 points, approximately 7.7 percent.
???The National Bureau of Economic Research, a private organization operating out of Cambridge, Mass. that provides widely accepted definitions for recessions and expansion, announced that the U.S. has been in a recession since December 2007 on Monday as stock markets plunged in the background.
???UB economists at the university's Center for Human Capital (CHC) made the call on the economic slump based on a recession-dating method developed to forecast recessions at the state level. According to CHC officials, the determination system is based on the system used at the National Bureau of Economic Research.
???"We used a model that had a select set of indicators that collectively signal the beginning of the recession," said Isaac Ehrlich, the chairman of the Department of Economics and director of the CHC. "Upon testing the model, we found out that our model was successful in identifying the beginning of all of the past recessions, five total, in New York since 1970."
???After New York State Comptroller Thomas DiNapoli contracted them, the CHC determined the state of recession using the total employment number, unemployment rate and corporate tax index.
???The CHC was given the task of determining the forecast, a crucial component in the state's decision-making process when it comes to matters of cutting spending and increasing taxes.
???"I can't say that we were happy to find out that we were in a recession, but we were happy to find out that the model worked," Ehrlich said.
???Although the model cannot determine the length of the recession, Ehrlich explained that the state is in for a longer state of decline than the nation as a whole.
???"The last recession in 2001 lasted three quarters at the national level, but 10 quarters here in New York state," Ehrlich said.
???Ehrlich believes that there had been no official state or national proclamation of a recession before the CHC issued its report. With the CHC, he plans to continue assisting New York with financial and economic consultations.
Photo: Courtesy of Laron Fomby
