In the U.S., we measure the length of recessions by declaring certain quarters/months to be turning points: peaks or troughs. A recession is the period between a peak and a trough.
In most of the rest of the world, recessions are said to have begun after the 2nd consecutive quarter of declining real GDP.
Turning points in the U.S. are established by the NBER’s business cycle dating committee.
In classes, I note the personal observation that peaks and troughs are misnamed. Peak evokes a v-shaped change in direction for the economy at its top. My life experience over the last 40 years have been that those peaks are much more rounded, and difficult to spot in real time. By the same token, trough evokes the image of something u-shaped. And yet, in real time, troughs can be fairly easy to feel and notice (unless one gets excessively focused on the unemployment rate — a badly lagging indicator). Having said that, they can also be hard to spot since troughs are sometimes w-shaped rather than v-shaped. In short, it pays to wait.
This is reflected in what is often a rather long delay in declaring turning points in the U.S. Penn macroeconometrician Francis Diebold, writing at No Hesitations shows this in tabular form. The last 5 peaks were declared 6 to 12 months after the fact.
But this time around, the peak was very pronounced. On Monday the NBER declared a peak in the U.S. in February.
I’d narrow that down even further to somewhere between the initial stock market sell off in the third week of February, and the widespread closure of universities in the second week of March.
Of course, this point is mostly academic: a date that is most probable will be important to put in the historical record (I can remember ferreting out the dates of the turning points from library books — pre-internet — while working on my dissertation in 1989). In the real world, we’ve all been fairly certain we’ve been in recession for 3 months now. Other countries will have to wait until late in summer to be “official”.
No comments:
Post a Comment