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The committee has determined that a peak in monthly economic activity occurred in the US economy in February The peak marks the end of the expansion that began in June and the beginning of a recession. The expansion lasted months, the longest in the history of US business cycles dating back to The record Nber dating cycles held by the business expansion that lasted for months from March to March This report is also available as a pdf.
The committee also determined that a peak in quarterly economic activity occurred in Q4. Note that the monthly peak February occurred in a different quarter Q1 than the quarterly peak. The committee determined these peak dates in accord with its long-standing policy of identifying the months and quarters of peak activity separately, without requiring that the monthly peak lie in the same quarter as the quarterly peak.
Further comments on the difference between the quarterly and monthly Nber dating cycles are provided below.
A recession is a ificant decline in economic activity spread across the economy, normally visible in production, employment, and other indicators. A recession begins when the economy reaches a peak of economic activity and ends when the economy reaches its trough. Between trough and peak, the economy is in an expansion.
Because a recession is a broad contraction of the economy, not confined to one sector, the committee emphasizes economy-wide indicators of economic activity. The committee believes that domestic production and employment are the primary conceptual measures of economic activity. In determining the date of the monthly peak, the committee considers a of indicators of employment and production.
The committee normally views the payroll employment measure, which is based on a large survey of employers, as the most reliable comprehensive estimate of employment. This series reached a clear peak in February. The committee recognized that this survey was affected by special circumstances associated with the pandemic of early In the survey, individuals who are paid but not at work are counted as employed, even though they are not in fact working or producing.
Workers on paid furlough, who became more numerous during the pandemic, thus resulted in an overcount of people working in recent months. Accordingly, the committee also considered the employment measure from the Bureau of Labor Statistics household survey, which excludes individuals who are paid but on furlough.
This series plateaued from December through Februaryand then fell steeply from February to March. Because both series measure employment during the week or pay period containing the 12th of the month, they understate the collapse of employment during the second half of March, as indicated by unprecedented Nber dating cycles of new claims for unemployment insurance. The committee concluded that both employment series were thus consistent with a business cycle peak in February.
These measures estimate production that occurred over an entire quarter and are not available monthly. The most comprehensive monthly measure of aggregate expenditures, which includes roughly 70 percent of real GDP, is monthly real personal consumption expenditures PCEpublished by Nber dating cycles BEA.
This series reached a clear peak in February The most comprehensive monthly measure of aggregate real income is real personal income less transfers, from the BEA. The deduction of transfers is necessary because transfers are included in personal income but do not arise from production.
This measure also reached a well-defined peak in February The quarterly average of employment as measured by the payroll series rose from Q4 to Q1. However, the committee concluded that the special factor noted above implies that the series should not play a ificant role in determining the quarterly peak. The quarterly average as measured by the household survey reached a clear peak in Q4.
The fact that the monthly peak of February occurred in the middle of Q1 while the quarterly peak occurred in Q4 reflects the Nber dating cycles nature of this recession. The usual definition of a recession involves a decline in economic activity that lasts more than a few months. However, in deciding whether to identify a recession, the committee weighs the depth of the contraction, its duration, and whether economic activity declined broadly across the economy the diffusion of the downturn.
The committee recognizes that the pandemic and the public health response have resulted in a downturn with different characteristics and dynamics than prior recessions. Nonetheless, it concluded that the unprecedented magnitude of the decline in employment and production, and its broad reach across the entire economy, warrants the deation of this episode as Nber dating cycles recession, even if it turns out to be briefer than earlier contractions.
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Published June 8, The Month of the Peak In determining the date of the monthly peak, the committee considers a of indicators of employment and production. Further Comments The usual definition of a recession involves a decline in economic activity that lasts more than a few months.
Related Topics Business Cycles. The Economics of Digitization. Sloan Foundation, provides a forum for disseminating research The extent to which individual responses to household surveys are protected from discovery by outside parties dependsNber dating cycles
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