Sep

20

They just announced 1 1/4 years late that the recession ended. Many interesting questions arise. What would happen if you bought and sold a swing system, when they announced recession and when the announced expansion? What are the chances that a random number generator or intelligent robot could do better at calling turns in the economy than the NBER? Many others.

Scott Brooks comments:

The recessions over?!?!!!?

I find that hard to believe. Just a minute….let me turn around and check something….looking….looking….OH MY GOSH!!!! There ARE monkeys flying out of my butt….the recession MUST BE OVER!!!

I work with a lot of insurance related organizations (brokerages, TPA's, insurance companies) and there is nothing happening in the insurance world that indicates the recession is over. Workers insured under workers compensation is down 20%+ off it's high. Workers comp premiums are down. Business insurance premiums are down. There are still more companies that are going out of business than there are start ups. There are still more companies that are contracting than there are companies that are expanding.

At the grassroots level, there is a lot of pain….and the bad stuff outweighs the good.

The recession is not over.

Jeff Sasmor writes:

What they said was that the last one ended June 09. They also said a decline now would count as a new recession. Talk about a lagging indicator!

NBER said "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 2007. The basis for this decision was the length and strength of the recovery to date.

Pitt T. Maner III writes:

Not only is the recession over but now the technical purists say it is impossible to have a "double-dip" since another downturn would be counted as a separate recession. Let the cheerleading begin…

Stefan Jovanovich shares:

"The Business Cycle Dating Committee was created in 1978, and since then there has been a formal process of announcing the NBER determination of a peak or trough in economic activity. Those announcement dates were: June 3, 1980; July 8, 1981; January 6, 1982; July 8, 1983; April 25, 1991; December 22, 1992; November 26, 2001; July 17, 2003; December 1, 2008; and September 20, 2010."

From NBER FAQ

NBER Cycles


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1 Comment so far

  1. Craig Bowles on September 21, 2010 6:39 am

    When Moore and Zarnowitz were working together and serving on the committee, the dating was better as they used the coincident index. June is similar this time to the coincident index but the 2001 setup was the same as 1973-75 with most of the indicators pointing to one month and employment lagging. The NBER chose the lagging employment date which was more politically correct. When you compared cycles using their date, everything was messed up. Eventually, they revised their date back to the right one which everyone already knew. The best thing to do is just follow the Coincident index put out by the Conf Board. Index levels have to move lower or higher over at least a six-month period to be called a turn but you have the month exactly. For inflation, the growth rate is used rather than the index level. The NBER could have made their call in Q1 after they had the confirmation but waited.

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