National Bureau of Economic Research

• 1. Introduction

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  In September 2010, the National Bureau of Economic Research held a conference call with its Business Cycle Dating Committee. Afterward, the organization announced that the Great Recession in the United States had ended in 2009. By its reckoning, the downturn ran from December 2007 to June 2009. Newspapers promptly noted that most Americans did not agree. People were still struggling, and unemployment remained high. The National Bureau of Economic Research, usually shortened to NBER, is a private nonprofit based in the United States. How did a research group outside government come to hold a role that makes headlines? Who started it, who has led it, and which famous economists have passed through its doors? And who pays for the work? The answers begin with a decision about what counts as a recession.

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• 2. Dating the Downturns

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  Eight economists sit on the Business Cycle Dating Committee, and the president of the NBER chooses every one of them. The members tend to be highly distinguished figures in the field. Their meetings are not publicized and follow no fixed schedule. The committee is a retrospective marker, not a real-time referee. It does not predict downturns or make judgments as events unfold. The habit traces back to the 1960s, when the Commerce Department began publishing a digest that relied on the NBER's analysis of the business cycle. Decisions are not always unanimous. According to the source, the arguments usually concern the exact start and end points of a recession, not whether one happened.

  The NBER also works from a wider definition than the one common in the media. Many news outlets treat two consecutive quarters of shrinking gross domestic product as a recession. The NBER instead describes "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales". Its dates usually match peaks and troughs in real GDP, though not always.

  The bureau gives several reasons for this approach. Looking at many indicators, it believes, gives a truer picture than GDP alone. It weighs income-side measures such as gross domestic income alongside product-side estimates. It also favors monthly indicators over quarterly ones, because it wants to time expansions and recessions finely. A looser definition lets it judge how deep a decline runs. Two quarters of very slight negative growth might be labeled stagnation, not recession.

  Critics point out that the NBER never defines exactly what "significant" means. Each case is judged on its own, using factors with no set scale or weighting. That subjectivity has prompted accusations that committee members can play politics. Defenders note that a long contraction may not include two straight negative quarters at all, as happened in the recession after the dot-com bubble burst.

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• 3. A Gap in the Numbers

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  The year 1920 brought a new organization, born from Progressive era arguments over how income was divided. Malcolm Rorty and Nachum Stone founded the NBER to fill a shortage of reliable economic data. Its stated purpose is undertaking and spreading "unbiased economic research" for policymakers, business professionals, and academics. One rule follows from that purpose. The bureau presents data and findings but does not make policy recommendations.

  Early money came from the Carnegie Foundation, the Laura Spelman Rockefeller Foundation, and various corporations. The first director of research was Wesley Clair Mitchell, a professor at Columbia University. His early projects measured labor's share of national income and examined unemployment alongside the swings of the business cycle.

  Mitchell would guide the organization's research for 25 years. That was long enough to recruit people who changed how nations are measured.

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• 4. Counting a Nation

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  In 1927, Mitchell brought Simon Kuznets into the bureau. Kuznets later played a pivotal part in building the U.S. national income accounts. That work laid the foundation for the Nobel Prize he received in 1971.

  World War II marked a turning point, after which the NBER broadened its research scope. During the 1950s and 1960s, Milton Friedman and Anna Schwartz produced groundbreaking studies of how monetary policy affects business cycles. Labor economics flourished in the same years.

  The NBER also gets credit for bringing human capital into the economic mainstream. Before the 1950s, economists rarely used the concept. Through the 1960s, the bureau steadily raised how often it appeared in research.

  Mitchell's successor as research director was Arthur Burns, who soon took on a larger title.

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• 5. Presidents and Reinvention

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  Arthur Burns became the NBER's president in 1956, and John R. Meyer succeeded him in 1967. Meyer added two NBER journals and opened offices in several cities.

  The biggest change came in 1977, when Martin S. Feldstein, a Harvard professor, took over as president. Feldstein expanded the network of university-based affiliates. He moved the headquarters to Cambridge, Massachusetts. He introduced the NBER Working Paper Series, set up research programs focused on specific areas, and started the NBER Summer Institute.

  James Poterba took over from Feldstein in 2008 and kept the growth going. The number of affiliated researchers rose significantly, and new programs and working groups appeared. Poterba, a professor at MIT, is the current president and CEO.

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• 6. The Research Map

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  Twenty research programs and 14 working groups now organize the NBER's work. The programs range from Asset Pricing and Corporate Finance to Health Care, Law and Economics, and Political Economy. Others include Economics of Aging, Environment and Energy Economics, and Productivity, Innovation, and Entrepreneurship.

  The working groups are narrower and often unexpected. One studies the Chinese economy, and another the economics of crime. Others cover Market Design, Personnel Economics, Insurance, Urban Economics, and Race and Stratification in the Economy.

  The volume is large. The NBER distributes over 1,200 new research studies a year and holds roughly 125 meetings annually on a range of economic topics. At those gatherings, researchers share findings and launch new projects.

  Each July, the Summer Institute gathers nearly 50 smaller meetings under one banner.

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• 7. Prizes, Posts and Patrons

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  Wassily Leontief, in 1973, was the first Nobel Memorial Prize winner in economics on the bureau's list of notable members after Kuznets. Milton Friedman followed in 1976, and Gary Becker in 1992. Paul Krugman won in 2008 and Ben Bernanke in 2022. Claudia Goldin won in 2023. In 2024, Daron Acemoglu, Simon Johnson, and James A. Robinson shared the honor. Peter Howitt appears with the year 2025.

  Members have also served in Washington. Many chairs of the Council of Economic Advisers were once NBER research associates. Arthur F. Burns held the post from 1953 to 1956, and Martin Feldstein from 1982 to 1984. Joseph Stiglitz served from 1995 to 1997, followed by Janet Yellen from 1997 to 1999. Ben Bernanke chaired the council in 2005-2006, Christina Romer in 2009-2010, and Cecilia Rouse in 2021-2023.

  Grants from government agencies, private foundations, and corporate and individual donors pay for the work. Income from the NBER's investment portfolio helps too. The largest funders are the National Institutes of Health, the National Science Foundation, the Social Security Administration, and the Alfred P. Sloan Foundation.

  A 2010 report from the University of Pennsylvania ranked the NBER as the second most influential domestic economic policy think tank. Only the Brookings Institution placed ahead of it.

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