Monday, September 20, 2010

Trough Dated

Unlike most other countries, in the U.S., business cycle peaks and troughs are “officially” dated by a committee.

This was a big topic of discussion in the Spring 2010 class, because there wasn’t an official date for the trough yet, but we discussed how it was likely to be in summer of 2009 (I think I was leaning towards August).

As of September 20, 2010, it’s official: the recession ended in June of 2009.

The graph in the article is instructive because it shows that the trough is not when the economy has recovered, or when everyone starts to feel like things have returned to normal, but rather when we stop declining.


This also shows that the rate of recovery (the slope) is about the same as in the last two recessions. The lends credence to the idea that the Obama administration is doing a normal job. However, comparison with the “Reagan recovery” lends credence to the idea that Reagan did something that others didn’t. And of course, it could all be luck.

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