Picking a Recession End Date

Posted Saturday, April 03 2010

The BLS reported yesterday that the US gained 162,000 jobs last month and may have bounded the end of the recession at the same time. As my previous post on dating recessions with GDP and employment showed, the NBER uses both measures to gauge the business cycle and determine recession start and end dates. In recent recessions they seem have given more weight to GDP, which bottomed in June of last year and has since returned to growth.

GDP (Peak to Trough in Red)

With the report that employment grew fairly strongly last month (all things considered), there's a good chance that we've also seen the bottom in employment for this cycle.

Employment (Peak to Trough in Red)

If that's the case, it's very likely that the NBER will declare the recession to have ended sometime between June 2009 and December 2009. Given their past tendency to weigh GDP more heavily in their determinations, they may end up with a summer 2009 end date for this recession. I favor the approach of using the statistical union of GDP and employment decline months to mechanically define a period of recession, however, so I'm hoping that the official end date will be December 2009 (or whatever month the employment low eventually falls on).

I'm continuously tracking GDP and employment in attempts to bound this recession mechanically. Check back monthly for updates.