Japanese Yen Holds Strong as NBER Confirms the US Entered Recession in December 2007

The National Bureau of Economic Research (NBER) has confirmed that the US entered recession in December 2007, as US GDP fell 0.2% during Q4 2007. While GDP actually rose during Q1 and Q2 2008 by 0.9% and 2.8%, respectively, and then subsequently dropped 0.5% in Q3 2008, the NBER does not judge a recession to be 2 consecutive quarters of negative GDP. Instead, the group looks at other indicators as well, including employment, industrial output, and wholesale-retail sales. Indeed, while the chart below has not been updated following this latest announcement, a look at historical unemployment figures shows that US economic conditions have been dour for quite some time.

The news has kept US stock markets down more than 5%, and leaves the Japanese yen the strongest of the major currencies as risk aversion and deleveraging work in the low-yielder's favor. If equities and other risky assets continue to take a hit, the Japanese yen could easily take its late-October highs.

DailyFX

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