Tuesday, April 13, 2010

Update on Recession Ending in July 2009

I posed a question on this recent CD post asking why the St. Louis Fed graphs are showing the recession ending in July 2009. Max commented and provided the answer. In the Notes section below each graph you can click on "US recession dates" where it says:

"The NBER has not yet determined the end of the recession that began in December 2007. The date 2009-07-01 has been substituted in graphs as an estimate. This estimate is based on a statistical model for dating business cycle turning points developed by Marcelle Chauvet and Jeremy Piger (A Comparison of the Real-Time Performance of Business Cycle Dating Methods, Journal of Business and Economic Statistics, 2008, 26, 42-49). For more information, see

The graph above shows the Chauvet and Piger recession probabilities back to January 2010 (data here). By July 2009, the recession probability had decreased to 15%, from 77.3% in June 2009, and that huge drop signalled the end of the last recession. Since August of last year, the recession probabilities have been in single-digits and falling, to only 2.8% for January 2010 (most recent month).

My UM-Flint colleague Chris Douglas also points out that the Minneapolis Fed is also using July 2009 as its estimate of the end of the recession.


At 4/13/2010 9:36 AM, Blogger juandos said...

"The NBER has not yet determined the end of the recession that began in December 2007"...

Hmmm, I'm thinking the recession began in Dec. of '08: The latest job loss is the worst since December 1974, and brings job losses to 1.8 million in just the last three months, or half of the 3.6 million jobs that have been lost since the beginning of 2008...

At 4/13/2010 10:20 AM, Anonymous Anonymous said...

Unemployment was under 5% in mid 08. Maybe NBER isn't good with figures.

At 4/13/2010 10:59 AM, Anonymous geoih said...

I sure wish those 17% unemployed would quit whining about the recession, then. Don't they know they're prospering?

At 4/13/2010 11:31 AM, Blogger Marty Heflin said...

Given these dates, is it not correct to say that Bush's recession was better than Obama's recovery?

At 4/13/2010 11:35 AM, Anonymous Anonymous said...

So I read an article on USAtoday that graphed "spending as percent of the economy" vs "revenue as percent of the economy" and overlayed the timeline with the Presidents in charge (http://www.usatoday.com/news/washington/2010-04-12-deficit_N.htm)

This got me curious as to whether this was really the data that should be mapped. I feel that Congress is more responsible for actual spending (or a combination of Administration/Congressional majority). I went in search of more appropriate data and found: http://iamwil.posterous.com/senate-majority-vs-national-debt-getting-at-p

Some grammar mistakes in the explanations (as well as good points about accounting for inflation that were made in the comments) make me question whether this is really the responsible graphing that I'm looking for. But I thought I'd pose the question to Carpe Diem.

Is there an appropriate, responsible, unbiased way to graph the fiscal responsibility of the US government and compare that to who was in control of the purse strings at the time?

I'm not fishing for fodder with which to feed political bickering. In fact, this most likely proves that both parties are to blame. However, it would at least be nice to have some data with which to push both parties to work together to become more fiscally responsible.

And I'm soooo not a math person or I'd attempt to do this myself.

At 4/13/2010 11:52 AM, Blogger Benjamin Cole said...

Die, recession, die, die, die.
No double dip that I can see. Asai and Europe are moving ahead.
Chinese policy, both monetary and fiscal, is stimulative, and it is working.

At 4/13/2010 11:57 AM, Anonymous Anonymous said...

The NBER Statement

Some NBER member views:

Jeff Frankel

Bob Gordon

At 4/13/2010 2:36 PM, Anonymous Junkyard_hawg1985 said...


Here is the data you requested. The best reference for debt load is public debt as a percentage of gross domestic product. This corrects for the size of the economy. From Wikipedia, I got the data for debt as a percent of GDP and compared that to the party in power. There are three possibilities: 1) Democrats control White House and both houses of Congress 2) Republicans have full control, or 3) power is split (i.e. Rep President & Dem congress). I added up the change in debt as a percentage of GDP by the party in power. In 1940 debt as a percent of GDP stood at 44.2%. Here are the results:

Democrats had full control during 25 years since 1940. During those 25 Years, the national debt INCREASED by 41.5% of GDP.

Republicans had full control for a total of 7 years. During those 7 years, debt as a percent of GDP DECREASED by 1.2% of GDP.

Power was split for 37 years. During those 37 years, debt as a percentage of GDP DECREASED by 31.5%.

Note: For the year 2001, I assumed Republican control. Republicans had full control for most of the year until Jim Jeffords switch parties. Spending and taxes were set prior to the party switch.

At 4/13/2010 3:27 PM, Blogger KO said...

If the statistical model is pretty good, why do we need a panel of academics to make any calls on the date? There don't seem to be any false positives even decades back.

They should just review the model 12 months in the mirror and make the call quickly.

It certainly doesn't look like the 2001 recession started in March 2001. The kink in the GDP graph started in Q3 of 2000, which is about when the probability pegs it as well.

At 4/13/2010 5:06 PM, Anonymous Debt Man said...


I think you were looking at the charts upside down.

See http://en.wikipedia.org/wiki/File:USDebt.png

At 4/13/2010 11:20 PM, Blogger bobble said...

junkyard:"Democrats had full control during 25 years since 1940. During those 25 Years, the national debt INCREASED by 41.5% of GDP."

you are seriously cherry picking that data.

you use the years 1940 to present, which includes WWII. debt went from 40% of GDP to 120% of GDP during the war and democrats were in control almost all that time.

why not start after WWII?

At 4/14/2010 6:39 AM, Blogger juandos said...

bobble says: "why not start after WWII?"...

Then let's start before WWII when
FDR and the Dmocratically controlled Congress were floundering about wasting other people's money?

At 4/14/2010 8:56 AM, Anonymous Junkyard_hawg1985 said...


I was not cherry picking the data. I used the full data set that was available from Wikipedia. Prior to 1940, we didn't have an official measure of national GDP. Including the period from 1900 to 1940 using estimated GDP data and gross debt from this source: http://www.usgovernmentspending.com/federal_debt_chart.html#copypaste
Things look even worse for democrats.

Republicans has full control from 1901-1910 and the debt DECREASED from 10.37% to 7.94% of GDP. They also had full control from 1921 to 1930. During this period debt DECREASED from 29.36% to 17.75% of GDP.

Democrats had full Control from 1913 to 1918 and debt INCREASED from 7.67% of GDP to 19.25% of GDP. Democrats also had full control from 1933-1940 (& Beyond). During this period, the debt INCREASED from 33.2% of GDP to 42.37% of GDP.

The rest of the years had split control.

At 4/14/2010 9:16 AM, Anonymous Junkyard_hawg1985 said...


I looked at the chart just fine. More importantly, I used the reported data for the calculations.

At 4/14/2010 11:46 AM, Blogger bobble said...

This comment has been removed by the author.


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