Key Figures Behind GDP and Business Cycle Measurement

Simon Kuznets (1901-1985)

A Russian-born American economist who led the team that produced the first official U.S. national income estimates, delivered to the Senate as National Income, 1929-32 in 1934. Kuznets spent decades at the National Bureau of Economic Research and at Pennsylvania, Johns Hopkins, and Harvard, and his empirical style — assemble the data first, theorize afterward — shaped how economics was practiced in the mid-twentieth century. He received the Nobel Memorial Prize in Economic Sciences in 1971 for his empirically founded interpretation of economic growth. Kuznets was also among the sharpest early critics of the measure he helped create, repeatedly insisting that national income captures market production and not national welfare, and questioning whether defense and financial intermediation belonged in a measure of what a country gains.

Richard Stone (1913-1991)

The British economist usually called the father of national income accounting in its modern, systematized form. Stone worked on wartime national income estimates for the United Kingdom alongside James Meade, and afterward organized the accounts as a closed double-entry system in which every flow appears twice, so the whole structure has to balance. That insight is what turned national income estimates into national accounts. He was the principal author of the United Nations System of National Accounts published in 1953, the template that made cross-country comparison possible, and he later directed the Department of Applied Economics at Cambridge. Stone received the Nobel Memorial Prize in Economic Sciences in 1984.

Wesley Mitchell (1874-1948) and Arthur Burns (1904-1987)

Mitchell founded the National Bureau of Economic Research in 1920 and served as its first director of research, devoting his career to documenting the business cycle empirically rather than deducing it from theory. Arthur Burns was his student and collaborator, and the two co-authored Measuring Business Cycles in 1946, which set out the NBER method of identifying peaks and troughs from the behavior of many series at once. Burns later chaired the Council of Economic Advisers under President Eisenhower and served as Chairman of the Federal Reserve from 1970 to 1978. The NBER approach they built is why recession dating in the United States is still done by a private research body rather than by a government statistical agency.

Julius Shiskin (1912-1978)

A government statistician who ran the Census Bureau's economic statistics work, later served as Chief Statistician at the Office of Management and Budget, and became Commissioner of the Bureau of Labor Statistics in 1973. Shiskin developed the X-11 seasonal adjustment program, the ancestor of the methods still used to strip predictable seasonal swings out of economic data. He is also the source of the most widely repeated misconception about recessions: in a 1974 newspaper article he offered several rules of thumb for spotting one, including two consecutive quarters of declining real GDP. That shorthand escaped into common usage, but it has never been the standard the NBER actually applies.

Arthur Okun (1928-1980)

An American economist who served on and later chaired the Council of Economic Advisers under President Johnson before moving to the Brookings Institution. In a 1962 paper on potential output, Okun documented a stable empirical relationship between the change in the unemployment rate and the growth of output relative to potential — the rule now taught as Okun's law, which links the labor market directly to the GDP data. He is also credited with the Misery Index, the simple sum of the unemployment rate and the inflation rate, and with Equality and Efficiency: The Big Tradeoff (1975). Okun's law is a statistical regularity estimated from data, not an accounting identity, and its coefficient has drifted over time.