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Experts target birth of recession

The six economists who determine when recessions officially begin and end have publicly mentioned March for the first time as the month in which the longest economic expansion in American history "possibly" ended and the current recession "possibly" began.

March 2001 appeared Tuesday in a memo signed by the six economists and posted on the Web site of the National Bureau of Economic Research, a nonprofit research organization in Cambridge, Mass., that has gained over the years the final say in dating business cycles.

"I would not be surprised to see March chosen as the peak month of the last expansion and thus that makes March the first month of the ongoing recession," said Robert Gordon, a Northwestern University economist and a member of the Bureau's Business Cycle Dating Committee.

Until now, the committee had not publicly mentioned a possible starting date for the recession.

The decision will probably come soon, Gordon said in a telephone interview, either at a formal committee meeting, the traditional method, or through e-mail exchanges.

Gordon and Robert Hall, a Stanford University economist and the committee chairman, were described by another committee member as the most convinced that March was the turning point. They are the senior members and their view carries a lot of weight. Some other members, however, are less certain. Ben Bernanke, a Princeton University economist, is one.

"It is a very difficult call," Bernanke said, "because the indicators are not as synchronized as they usually are."

The popular definition of a recession is two consecutive quarters of contraction in the gross domestic product, a proxy for the entire economy.

The committee, however, tracks more detailed measures and sometimes waits a year or more beyond what seems to be the turning point in the business cycle to be sure that an expansion or a contraction does not peter out. This time, the terrorist attacks strengthened the view that March marked the start of the 10th recession since World War II.

"We are now about two months after Sept. 11," Gordon said, "and I do not think that we would be talking so soon about dating the start of a recession if it had not been for the extra downward push to the economy from Sept. 11."

If March 2001 becomes the official date, then the expansion that started in March 1991 will have ended on its 10th birthday.

The average length of the nine previous recessions since World War II was 11 months. On that basis, the March recession would end in February. The two longest recessions _ in the mid-1970s and early 1980s _ each lasted 16 months.

The Business Cycle Dating Committee takes the gross domestic product into account, but since GDP is continually revised, often decades later, the committee relies much more on four other national gauges: industrial production, employment, inflation-adjusted personal income and wholesale-retail trade.

Three of the four indicators have behaved in the past few months as they behaved in the early months of previous recessions, the committee said in its latest monthly progress report, which was posted on the Internet Monday. The fourth, personal income, had not peaked in September, although it probably has now, Gordon said.

The starting date is a hard call this time.

Usually, the committee's favored indicators turn down together, but this time industrial production peaked in September of last year, wholesale and retail trade during the winter, employment last March and personal income probably in October. The March date represents a blending, according to committee members.

"We could end up deciding tentatively among ourselves on the date for the peak," said Jeffrey Frankel, an economist at Harvard's Kennedy School of Government, "and yet wait six months to officially announce it."