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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 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 ofthe 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 herereal 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 ofwhile 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.
Business Cycle Dating Committee, National Bureau of Economic Research. This report is also available as a file. CAMBRIDGE September 20, - The Business Cycle Dating Committee of the National Bureau of Economic Research met yesterday by conference call. Does the Committee follow the NBER Business Cycle Dating Committee in its deliberations? While the CEPR Euro Area Business Cycle Dating Committee has been conceived to operate in a manner similar to the NBER Business Cycle Dating Committee, its deliberations and timing of . The Committee defines a recession as "a significant decline in the level of economic activity, spread across the economy of the euro area, usually visible in two or more consecutive quarters of negative growth in GDP, employment and other measures of aggregate .
The committee designated June as the month of the trough based on several monthly indicators. The trough dates for these indicators are:.
The NBER's Business Cycle Dating Committee
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, inthe trough in payroll employment occurred 21 months after the NBER trough date.
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Inthe 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.
The Euro Area Business Cycle Dating Committee is organizing a conference on potential output and output gap measurement. The workshop is calling for papers that can shed light on how theoretical and statistical concepts of potential output and the output gap relate and how to measure them in practice. Deadline: December 01, Recent events. Apr 30, The business cycle describes the rise and fall in output of goods and services in an economy. A measure often used to represent this is the rise and fall . The NBER's Business Cycle Dating Committee. The NBER's Business Cycle Dating Committee maintains a chronology of the U.S. business cycle. 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.
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.
Still, a well-defined peak or trough in real sales or IP might help to determine the overall peak or trough dates, particularly if the economy-wide indicators are in conflict or do not have well-defined peaks or troughs.
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