From the BLS,
One of the burning questions in my mind right now is when the NBER Business Cycle Dating Committee will declare that the recession began (and when they will make the announcement (see Brad DeLong's comment).
But this is an odd one, in part for the reasons stated by David Altig. Altig stops short of calling this a recession, but contrasts the strong GDP data and the weak employment data as he pities the Business Cycle Dating Committee for the tough job they have ahead.
How do you square 3.3% GDP growth with a 0.4% increase in the unemployment rate?
As I pointed out earlier, the GDP growth is largely due to the falling dollar. It's great if you're an exporter, but it does nothing to ease the pain in the housing sector. And as the WSJ Real Time Economics blog pointed out, Gross Domestic Income paints a somewhat less rosy picture. The unemployment rate, usually a lagging indicator, is looking more coincident, but that may be because the weakness in the economy is being masked somewhat.
There is little doubt in my mind that we are in a period that should be called a recession. I could guess at when the starting date would be, but it would be just that--a guess. I could make a case for sometime in the spring or summer. And while I admit to being troubled by thinking of a recession in the shadow of 3.3% GDP growth, I am struck by some very strong differences between this recession (if it is one) and the last two. The usual definitions aren't fitting well.
There's going to be a lot to talk about this fall. I'm working on the local economic outlook and giving a presentation on it a week from tomorrow. Lucky me.
The unemployment rate rose from 5.7 to 6.1 percent in August, and non-farm payroll employment continued to trend down (-84,000), the Bureau of Labor Statistics of the U.S. Department of Labor reported today. In August, employment fell in manufacturing and employment services, while mining and health care continued to add jobs. Average hourly earnings rose by 7 cents, or 0.4 percent, over the month.
Series Id: LNS14000000
Seasonal Adjusted
Series title: (Seas) Unemployment Rate
Labor force status: Unemployment rate
Type of data: Percent
Age: 16 years and over
One of the burning questions in my mind right now is when the NBER Business Cycle Dating Committee will declare that the recession began (and when they will make the announcement (see Brad DeLong's comment).
But this is an odd one, in part for the reasons stated by David Altig. Altig stops short of calling this a recession, but contrasts the strong GDP data and the weak employment data as he pities the Business Cycle Dating Committee for the tough job they have ahead.
How do you square 3.3% GDP growth with a 0.4% increase in the unemployment rate?
As I pointed out earlier, the GDP growth is largely due to the falling dollar. It's great if you're an exporter, but it does nothing to ease the pain in the housing sector. And as the WSJ Real Time Economics blog pointed out, Gross Domestic Income paints a somewhat less rosy picture. The unemployment rate, usually a lagging indicator, is looking more coincident, but that may be because the weakness in the economy is being masked somewhat.
There is little doubt in my mind that we are in a period that should be called a recession. I could guess at when the starting date would be, but it would be just that--a guess. I could make a case for sometime in the spring or summer. And while I admit to being troubled by thinking of a recession in the shadow of 3.3% GDP growth, I am struck by some very strong differences between this recession (if it is one) and the last two. The usual definitions aren't fitting well.
There's going to be a lot to talk about this fall. I'm working on the local economic outlook and giving a presentation on it a week from tomorrow. Lucky me.
Talk about uncertainty.
If push came to shove and I was forced to make a bet on whether 12 months from now the NBER will have declared a recession to have begun before today, I would bet "yes".
But this is a very unusual situation, as all of us who have been following it for the past few years will tell anyone willing to listen.
Many sectors of the economy continue to do very well. Our graduates are still landing good jobs. While there have been some layoffs in my region, I also hear lots of stories of expansion.
I don't think we've seen the full impact of the housing crisis yet, and that may be when GDP finally goes negative.
Unusual, but probably should be termed a recession.
Since the GDP has not declined for two consecutive quarters we are not in a period that should be called a recession. However, the increase in the unemployment rate is substantial and is of concern as it may indicate that we are approaching a recession.
The two consecutive quarters definition is not the definition that the NBER uses.
http://www.nber.org/cycles.html
The two consecutive quarters definition was a pretty accurate description of recessions up to 2001, and was the textbook definition all the way up until the mid-1990s. The change in the textbooks actually did pre-date the 2001 recession. Alan Stockman wrote in his textbook in 1999:
"A recession occurs when real GDP is unusually low relative to its trend value. Some economists define a recession as a period when real GDP falls for two consecutive quarters (3-month periods), although official recession dates set by the National Bureau of Economic Research are based on more sophisticated criteria."
Unfortunately, a few textbooks still give the two consecutive quarters definition sometimes with further explanation and sometimes not.
As for unemployment, if you look at the data, you see that the largest spike in unemployment associated with a given recession is usually at the end of said recession. In the post-war period, there has never been a spike in unemployment this large that was not associated with a recession--with the beginning date of the recession nearly coinciding with the beginning of the spike in unemployment. In other words, in post-war experience, the increase in unemployment has always coincided with the beginning of the recession rather than being a leading indicator.
The 2001 recession did not have two consecutive quarters of declining real GDP either. It had three quarters negative growth which alternated with positive growth. In mid-2002, only one quarter had been identified as having negative growth.
It is much more involved than just looking for two consecutive quarters of negative growth.