Business cycle dating committee nber
This report is also available as a PDF file. The committee reviewed the most recent data for all indicators relevant to the determination of a possible date of the trough in economic activity marking the end of the recession that began in December The trough date would identify the end of contraction and the beginning of expansion. Although most indicators have turned up, the committee decided that the determination of the trough date on the basis of current data would be premature. Many indicators are quite preliminary at this time and will be revised in coming months.
The Importance of NBER Announcement Dates
This report is also available as a PDF file. At its meeting, the committee determined that a trough in business activity occurred in the U. The trough marks the end of the recession that began in December and the beginning of an expansion. The recession lasted 18 months, which makes it the longest of any recession since World War II. Previously the longest postwar recessions were those of and , both of which lasted 16 months. In determining that a trough occurred in June , the committee did not conclude that economic conditions since that month have been favorable or that the economy has returned to operating at normal capacity.
Rather, the committee determined only that the recession ended and a recovery began in that month. A recession is a period of falling 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. The trough marks the end of the declining phase and the start of the rising phase of the business cycle. Economic activity is typically below normal in the early stages of an expansion, and it sometimes remains so well into the expansion.
The committee decided that any future downturn of the economy would be a new recession and not a continuation of the recession that began in December The basis for this decision was the length and strength of the recovery to date. The committee noted that in the most recent data, for the second quarter of , the average of real GDP and real GDI was 3. Identifying the date of the trough involved weighing the behavior of various indicators of economic activity.
Department of Commerce are only available quarterly. Further, macroeconomic indicators are subject to substantial revisions and measurement error. For these reasons, the committee refers to a variety of monthly indicators to choose the months of peaks and troughs. It places particular emphasis on measures that refer to the total economy rather than to particular sectors. These include a measure of monthly GDP that has been developed by the private forecasting firm Macroeconomic Advisers, measures of monthly GDP and GDI that have been developed by two members of the committee in independent research James Stock and Mark Watson, available here , real personal income excluding transfers, the payroll and household measures of total employment, and aggregate hours of work in the total economy.
The committee places less emphasis on monthly data series for industrial production and manufacturing-trade sales, because these refer to particular sectors of the economy. Movements in these series can provide useful additional information when the broader measures are ambiguous about the date of the monthly peak or trough. There is no fixed rule about what weights the committee assigns to the various indicators, or about what other measures contribute information to the process.
The committee concluded that the behavior of the quarterly series for real GDP and GDI indicates that the trough occurred in mid Real GDP reached its low point in the second quarter of , while the value of real GDI was essentially identical in the second and third quarters of The committee concluded that strong growth in both real GDP and real GDI in the fourth quarter of ruled out the possibility that the trough occurred later than the third quarter. The committee designated June as the month of the trough based on several monthly indicators.
The trough dates for these indicators are:. The committee concluded that the choice of June as the trough month for economic activity was consistent with the later trough months in the labor-market indicators—aggregate hours and employment—for two reasons. First, the strong growth of quarterly real GDP and real GDI in the fourth quarter was inconsistent with designating any month in the fourth quarter as the trough month.
The committee believes that these quarterly measures of the real volume of output across the entire economy are the most reliable measures of economic activity. Second, in previous business cycles, aggregate hours and employment have frequently reached their troughs later than the NBER's trough date. In particular, in , the trough in payroll employment occurred 21 months after the NBER trough date. In , the NBER trough date is 6 months before the trough in payroll employment.
In both the and cycles, household employment also reached its trough later than the NBER trough date. The committee noted the contrast between the June trough date for the majority of the monthly indicators and the October trough date for real personal income less transfers. There were two reasons for selecting the earlier date. The second was that real GDI is a more comprehensive measure of income than real personal income less transfers, as it includes additional sources of income such as undistributed corporate profits.
The committee's use of income-side measures, notably real GDI, is based on the accounting principle that the value of output equals the sum of the incomes that arise from producing the output. Apart from a random statistical discrepancy, real GDI satisfies that equality while real personal income does not. The committee also maintains a quarterly chronology of business cycle peak and trough dates. The committee determined that the trough occurred in the second quarter of , when the average of quarterly real GDP and GDI reached its low point.
An Excel spreadsheet containing the data and the figures for the indicators of economic activity considered by the committee is available at that page as well. The current members of the Business Cycle Dating Committee are: David Romer, University of California, Berkeley, is on leave from the committee and did not participate in its deliberations. The trough dates for these indicators are: Development of the American Economy. Economic Fluctuations and Growth.
International Finance and Macroeconomics. International Trade and Investment. Productivity, Innovation, and Entrepreneurship. Special Projects: Retirement and Disability Research Center. The Science of Science Funding Initiative. The Women Working Longer Project. Illinois Workplace Wellness Study. The Oregon Health Insurance Experiment.
He is also the Mitsui Professor of Economics at M. Blockchain, Distributed Ledgers, and Financial Contracting.
September 20, announcement of June business cycle trough/end of last recession. April 12, Memo from the Business Cycle Dating Committee. Business Cycle Expansion and contraction dates for the United States Economy. Latest announcement from the NBER's Business Cycle Dating Committee.
By Joseph Mason. First, of course, the trough only marks a turning point whereby growth of any dimension follows. Second, while the dating of troughs typically occurs with a lag, that lag seems to be greater in recent years.
One of the nber business cycle dating committee members major research themes in the National Bureau of Economic research is sources of inequality.
The chronology identifies the dates of peaks and troughs that frame economic recession or expansion. The period from a peak to a trough is a recession and the period from a trough to a peak is an expansion.
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The Business Cycle Dating Committee's general procedure for determining the dates of business cycles. The financial press often states the definition of a recession as two consecutive quarters of decline in real GDP. How does that relate to the NBER's recession dating procedure? Most of the recessions identified by our procedures do consist of two or more quarters of declining real GDP, but not all of them. In , for example, the recession did not include two consecutive quarters of decline in real GDP. In the recession beginning in December and ending in June , real GDP declined in the first, third, and fourth quarters of and in the first quarter of
Business Cycle Dating Committee Members
The chronology comprises alternating dates of peaks and troughs in economic activity. A recession is a period between a peak and a trough, and an expansion is a period between a trough and a peak. During a recession, a significant decline in economic activity spreads across the economy and can last from a few months to more than a year. Similarly, during an expansion, economic activity rises substantially, spreads across the economy, and usually lasts for several years. In both recessions and expansions, brief reversals in economic activity may occur-a recession may include a short period of expansion followed by further decline; an expansion may include a short period of contraction followed by further growth. The Committee applies its judgment based on the above definitions of recessions and expansions and has no fixed rule to determine whether a contraction is only a short interruption of an expansion, or an expansion is only a short interruption of a contraction. The most recent example of such a judgment that was less than obvious was in , when the Committee determined that the contraction that began in was not a continuation of the one that began in , but rather a separate full recession. The Committee does not have a fixed definition of economic activity.
This report is also available as a PDF file.
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Business Cycle Dating Committee, National Bureau of Economic Research
The committee maintains a chronology of the U. In its meeting, the committee determined that the U. Previously, the committee had determined that the economy reached a peak of activity in July The committee thus determined that the recession ended in March and that an expansion began at that time. The committee had waited to make the determination of the trough date until it was confident that any future downturn in the economy would be considered a new recession and not a continuation of the recession that began in July The committee noted that the broadest measure of economic activity -- gross domestic product in constant dollars -- had finally surpassed its previous peak by the third quarter of Only by December did the overall pattern of economic activity appear to be strong enough to warrant the determination of the trough date. The behavior of the economy in made the determination of the trough particularly challenging. Two important monthly indicators related to the production and sales of goods -- industrial production and manufacturing-trade sales in constant dollars -- had unambiguous troughs in early in March and January, respectively. Two other monthly indicators had declined to close to their minimum values by early , but continued to decline slightly for the rest of
The NBER's Business Cycle Dating Procedure: Frequently Asked Questions
This report is also available as a PDF file. The Committee met in response to growing evidence that the economy may have reached a cyclical peak in recent months and entered a recession at that point. The Committee concluded that the evidence is not sufficiently strong at this time to determine whether or not a recession has begun or, if so, to identify the cyclical peak. Some of the reasons for the Committee's caution were: Historically, the NBER's first announcement of a peak and on-set of a recession occurs only when the evidence about the actual behavior of the economy becomes available for a long enough period to resolve the ambiguities created by special events. The Committee has scheduled another meeting for late October.
Business Cycle Dating Committee, National Bureau of Economic Research
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Data in this graph are copyrighted. Please review the copyright information in the series notes before sharing. Federal Reserve Bank of St. Daily, 7-Day. The NBER identifies months and quarters of turning points without designating a date within the period that turning points occurred. The dummy variable adopts an arbitrary convention that the turning point occurred at a specific date within the period. Our time series is composed of dummy variables that represent periods of expansion and recession.News Update: NBER Calls An End To Longest Recession Since WWII