For several months, I had been getting increasingly curious about the fact that the St. Louis Fed’s FRED data and economic research service was no longer indicating a vertical “recession bar” from the period starting around mid-year 2009. Finally, last week, curiousity got the best of me and I called my St. Louis Fed contact. This was his response (confirming what I’d already inferred):
Apparently the two staff economists that review the FRED charts believe July 2009 is the date they believe the NBER will announce as the end of the recession. From what I understand a similar “call” was made toward the end of the 1990-91 recession.I don't agree with their assessment, but do think it noteworthy that one of our Federal Reserve banks has apparently “called” a July 2009 end to the recession. If I recall correctly, they did not add the recession bar until the NBER had officially made its call (in December 2008) that the recession had begun one year prior. So I'm not sure why they feel comfortbale making this call.If I was to highlight one source they used it would be Jeremy Piger’s (University of Oregon), recession probabilities. He was a staff economist until about 4-5 years ago.
In my opinion, too many indicators are still either flatlining or declining (albeit more modestly than they had been).
3 comments:
The last two quarters have looked like a "growthcession". There were areas of growth and areas of lingering recession. All in all they were substantially better than the previous two. Many of the predictions that I have seen call for stronger growth going forward. If true then the call will be July of 2009. I am more inclined to continue a wait and see attitude taking each point of data as it comes. If growth goes forward at a -1% to +1% rate then NBER may take its time.
Worse, I would argue that the NBER will hold off until later this year to make the call because if we have a "double-dip", I think they will combine the two recessions as opposed to having to separate ones like 1980-82.
olephart, I don't know if you invented or seek to popularize that term, but I'd stay away from "growthcession". We have too many buzzwords, misnomers and sound bites as it is.
This entire "tracking the economy" thing is a big exercise in macroeconomics. In the trenches, even in the best of times, some sectors are imploding. Even in the worst of times, some sectors are expanding. Whether the country is in an expansion or recession is the crude sum of the parts. So, "growthcession" makes the natural vicissitudes of any economic situation seem more significant than it is, considering we'd been deliberately choosing to ignore them all this time. Better to stick to the textbook terms, as long as no one reads too much into their technical simplicity.
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