The NBER’s Recession Dating Procedure

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 NBER’s Business Cycle Dating Procedure: Frequently Asked Questions

But we already knew that we were in a recession that had likely begun around that date. So, why does the NBER’s formal declaration matter? It is no secret that measures of employment fell sharply from February to March.

Economic Research (NBER) Business Cycle Dating Committee iden- tifies national recessions, neither it nor any other comparable organi- zation dates.

The committee has determined that a peak in monthly economic activity occurred in the U. The peak marks the end of the expansion that began in June and the beginning of a recession. The expansion lasted months, the longest in the history of U. The previous record was held by the business expansion that lasted for months from March to March The committee also determined that a peak in quarterly economic activity occurred in Q4. Note that the monthly peak February occurred in a different quarter Q1 than the quarterly peak.

The committee determined these peak dates in accord with its long-standing policy of identifying the months and quarters of peak activity separately, without requiring that the monthly peak lie in the same quarter as the quarterly peak. Further comments on the difference between the quarterly and monthly dates are provided below. A recession is a significant decline in economic activity spread across the economy, normally visible in production, employment, and other indicators.

A recession begins when the economy reaches a peak of economic activity and ends when the economy reaches its trough. Between trough and peak, the economy is in an expansion. Because a recession is a broad contraction of the economy, not confined to one sector, the committee emphasizes economy-wide indicators of economic activity.

Business Cycle Dating Committee, National Bureau of Economic Research

Business cycles are the “ups and downs” in economic activity, defined in terms of periods of expansion or recession. During expansions, the economy, measured by indicators like jobs, production, and sales, is growing–in real terms, after excluding the effects of inflation. Recessions are periods when the economy is shrinking or contracting. During this period, the average business cycle lasted about five years; the average expansion had a duration of a little over four years, while the average recession lasted just under one year.

The NBER’s Business Cycle Dating Committee has determined that a peak in business activity.

How does the Committee Define a Business Cycle? See Methodology. What data does the Committee use? See Data Sources. How is the Committee’s membership determined? The financial press often states the definition of a recession as two consecutive quarters of decline in real GDP. How does that relate to your recession dating procedure?

As an example, the Committee has identified the period from the first quarter in to the third quarter in as a recession, despite the fact that real GDP was growing in some quarters during that episode and that real GDP was higher at the end of the recession than at the beginning.

The NBER’s Business Cycle Dating Procedure

The recession is confirmed. The National Bureau of Economic Research reports ,. The committee has determined that a peak in monthly economic activity occurred in the U.

“The committee has determined that a peak in monthly economic activity of Economic Research’s Business Cycle Dating Committee said in a.

Nasty issues keep cropping up. That predicament is, more or less, why there may not be revelry for a rare achievement of the United States economy: 10 years of growth without a recession. That has happened only once before, during the long expansion that ended in March Instead, we are likely to see a sober anniversary, burdened by hypotheticals and gloomy predictions. With a trade war, simmering income inequality, a disappointing jobs report and shaky markets affecting the mood, this may not be the perfect time to pop the corks.

That careful formulation came from James Poterba, an M. The nonprofit research organization is the semiofficial arbiter of recessions and expansions in the United States. In an interview, Professor Poterba qualified that statement further. The closest the N. That imprecision itself is why, even if we were so inclined, we could not mark our calendars for an anniversary party on any specific day. The N.

Centre for Economic Policy Research

This report is also available as a PDF. The chronology identifies the dates of peaks and troughs that frame economic recessions and expansions. A recession is the period between a peak of economic activity and its subsequent trough, or lowest point. Between trough and peak, the economy is in an expansion. Expansion is the normal state of the economy; most recessions are brief.

The National Bureau of Economic Research’s assessment that the The NBER’s Business Cycle Dating Committee typically takes far longer to.

A business cycle dating committee will strengthen the information base for the economy and help gauge its changing nature. It has been a quarter of a century since India commenced the journey of opening its economy to the world. But the idea of a business cycle dating committee BCDC for India has not received sufficient attention. Most of the research in business cycles is done keeping in mind advanced industrial economies.

The scarcity of research for studies of business cycles in India along with data limitations might be some of the reasons why policymakers in India are not too concerned about this issue. Business cycles are the short-run fluctuations in aggregate economic activity around its long-run growth path. A BCDC maintains a chronology comprising alternating dates of peaks and troughs in economic activity. It analyses and compares the behaviour of key macroeconomic variables such as consumption, investment, unemployment, money supply, inflation, stock prices, etc.

Business Cycle

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.

most economists, including the National Bureau of Economic Research’s (​NBER) Business-Cycle Dating Committee, define a recession as a.

This copy is for your personal, non-commercial use only. Moreover, the speed of the announcement was unusually fast. Data during normal downturns are often tricky to interpret in real time and are often revised. The NBER waited until the end of April —which turned out to be after the early s downturn had already ended—to conclude the economy had topped out in July That would be a disaster, especially for the tens of millions of Americans who had only just gotten their finances in decent shape after the last downturn.

Write to Matthew C. Klein at matthew. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law.

Business Cycle Dating Committee

Read more: What is a recession? Here are the basics. The committee said that it had determined that economic activity had peaked in February, citing sharp drops in employment and personal consumption following that month. The recession declaration ended the month economic expansion that began in June , which eclipsed the s recovery as the longest on record.

Since the first cases of Coronavirus took form in the United States, over 42 million Americans have lost their jobs and turned to unemployment benefits.

NBER Business Cycle Dating Committee has determined that a peak in monthly US economic activity occurred in February , ending.

Topic Areas About Donate. Brian W. Cashell Specialist in Macroeconomic Policy Government and Finance Division Summary A recession is one of several discrete phases in the overall business cycle. The term may often be used loosely to describe an economy that is slowing down or characterized by weakness in at least one major sector like the housing market. The National Bureau of Economic Research NBER business cycle dating committee is the generally recognized arbiter of the dates of the beginnings and ends of recessions.

As with all statistics, it takes some time to compile the data, which means they are only available after the events they describe. Moreover, because it takes time to discern changes in trends given the usual month-to-month volatility in economic indicators, and because the data are subject to revision, it takes some time before the dating committee can agree that a recession began at a certain date. It can be a year or more after the fact that the dating committee announces the date of the beginning of a recession.

At the moment, there seems to be a growing sentiment that the U. When economists use the term, however, they try to do so consistently. Recessions typically have common characteristics and so economists try to identify the beginning and ending dates of recessions in order to further their overall understanding of the economy.

What is a Recession? A recession is one of several discrete phases in the overall business cycle.

NBER finds recession began in February, ending record 128 months of economic expansion.

Was the United States technically in a recession the last few months? And is the recession already over? Additionally, the committee says quarterly economic activity peaked in the fourth quarter of Still, with economic growth taking place in the second quarter this year, the textbook definition of a recession cannot apply to A recession begins when the economy reaches a peak of economic activity and ends when the economy reaches its trough, the committee adds.

The NBER committee recognizes the fact that the usual definition of a recession differs from what it put forth in its June report.

from one phase of the business cycle to another, using the NBER’s Notes: Table compares NBER business cycle dating committee’s chronology to the.

Burns and Wesley C. Mitchell, Measuring Business Cycles, remains definitive today. In essence, business cycles are marked by the alternation of the phases of expansion and contraction in aggregate economic activity, and the comovement among economic variables in each phase of the cycle. Aggregate economic activity is represented by not only real i. A popular misconception is that a recession is defined simply as two consecutive quarters of decline in real GDP.

Notably, the —61 and recessions did not include two successive quarterly declines in real GDP.

The U.S. entered a recession in February, according to the official economic arbiter

The Business Cycle Dating Committee’s general procedure for determining the dates of business cycles. The chronology identifies the dates of peak and trough months in economic activity. The peak is the month in which a variety of economic indicators reach their highest level, followed by a significant decline in economic activity. Similarly, a month is designated as a trough when economic activity reaches a low point and begins to rise again for a sustained period.

The NBER’s Business-Cycle Dating Procedure. Business Cycle Dating Committee, National Bureau of Economic Research. Robert Hall, Chair. Martin Feldstein.

The Committee had to adapt the NBER definition, however, to reflect specific features of the euro area. The euro area groups together a set of different countries. Although subject to a common monetary policy since , they even now have heterogeneous institutions and policies. Moreover, European statistics are of uneven quality, long time series are not available, and data definitions differ across countries and sources.

Skip to main content Skip to navigation. Quarterly series are currently the most reliable European data for our purposes and those around which a reasonable consensus can be achieved. The CEPR Committee analyses euro area aggregate statistics, but it also monitors country statistics to make sure that expansions or recessions are widespread over the countries of the area.

There is no fixed rule by which country information is weighted. The CEPR Committee views real GDP euro area aggregate, as well as national as the main measure of macroeconomic activity, but it also looks at additional macroeconomic variables, for several reasons. First, euro area GDP series constructed for the pre-EMU era reflect not only movements in economic activity but also changes in exchange rates, which are problematic.

Second, GDP statistics are sometimes subject to large subsequent revisions, and this makes them an imperfect indicator of current business cycle conditions. Third, measured GDP does not always move in parallel with its individual major components which may indeed be moving in different directions or other macroeconomic aggregates such as employment. Fourth, these variables are known to display more cyclicality than GDP and are useful in strengthening opinions when the GDP data do not seem very decisive.

Business Cycle and Recessions


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