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This evening, Calculated Risk has posted a rather stunning (and IMHO elegantly simple, albeit frightful) explanation of how the National Bureau of Economic Research's Business Cycle Dating Committee (the "NBER," whose Business Cycle Dating Committee is the group "officially responsible" for dating recessions in the U.S.) reviews quantitative data about our economy, and how they may very possibly reach a conclusion--given that the conventional wisdom of many economists is for the second-half of 2010 to be much more sluggish than the first six months--that our economy is still in a Great Recession, and therefore we can't be entering into a double-dip recession.

Putting it even more simply: the official organization for determining periods of economic recession in the U.S. may, instead, determine that the Great Recession never "ended," in the first place.

Starting off their observations tonight, the folks over at CR pointed to a quote from NBER Chair Robert Hall from an AP story from yesterday, in: "Recession Dating and a 'Double Dip'."

Yesterday an AP story quoted Robert Hall, the current Chairman of NBER on a "double dip": So what exactly is a 'double-dip' recession?

"The idea -- hypothetical because it has yet to happen -- is that activity might rise for a period, but not far enough to complete a cycle, then fall again, and finally rise above its original level, only then completing the cycle."

CR points us to the most recent "double-dip," in the early 1980's, when the NBER dated those as two separate recessions. You may read the NBER's announcement, from July 8th, 1981, declaring  the end of the recession in 1980 here: "Business Cycle Trough Last July."

And here's their declaration announcing the beginning of the 1981-1982 recession: "Current Recession Began in July."

The folks at Calculated Risk then point us to this public domain comment from the NBER: "The NBER's Recession Dating Procedure."

In choosing the dates of business-cycle turning points, the committee follows standard procedures to assure continuity in the chronology. Because a recession influences the economy broadly and is not confined to one sector, the committee emphasizes economy-wide measures of economic activity. The committee views real GDP as the single best measure of aggregate economic activity. ...

The committee places particular emphasis on two monthly measures of activity across the entire economy: (1) personal income less transfer payments, in real terms and (2) employment. In addition, the committee refers to two indicators with coverage primarily of manufacturing and goods: (3) industrial production and (4) the volume of sales of the manufacturing and wholesale-retail sectors adjusted for price changes.

Here's where CR's coverage of the matter becomes somewhat of a "stunner." They provide us with a review of the NBER's four criteria: real GDP (and real "Gross Domestic Income," or "GDI"),  industrial production, employment, and income (real personal income less transfer payments).

Here are the inconvenient, quantitative truths:


GDP through Q1 2010..."Real Gross Domestic Product and Income: Percent of Previous Peak."

In the early 1980's, as CR points out, real GDP and real GDI "...returned to pre-recession levels before declining again." This time, we're not yet there.

Industrial Production

Federal Reserve data on monthly industrial production through May: "Industrial Production: Percent of Previous Peak."

CR reminds us that industrial production is still 8.1% below the pre-recession peak, with growth slowing (although still expanding).  In the early '80's, industrial production was only about a half-point, percentage-wise, below its previous peak.


Bureau of Labor Statistics' Employment through June: "Employment: Percent of Previous Peak."

In the early 80's, employment returned to its previous peak. Now, not even close. Many economists are predicting that unemployment numbers may worsen during the balance of the year.

Real Personal Income

Real Personal Income (excluding transfer payments) through May: "Real Personal Income Less Transfer Payments:  Percent of Previous Peak."

And, lastly, we're told that while personal income returned to its previous levels in-between the double-dip in 1980-1982, real personal income has only increased slightly this time around, and we're 6% below the pre-recession peak.

So, it's not surprising that Calculated Risk would come to the following conclusions:

Based on these graphs and the NBER memos, it would seem pretty easy to date two recessions in the early '80s. However, if another recession starts this year, it will almost certainly be dated as a continuation of the "great recession" that started in 2007. If so, I'll need more blue ink to shade all my graphs ...

IMHO, more likely than not, these are the realities of our economy heading into the last four months of the 2010 election cycle.

In short, there can't be a double-dip recession if the Great Recession never ended, in the first place.

And, for Democrats, that may be the most brutal truth of all.

Originally posted to on Sat Jul 03, 2010 at 06:12 PM PDT.

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