OT:Understanding Recessions

Source: The National Bureau of Economic Research

The NBER officially declared an end to the economic expansion in February of 2020 as the U.S. fell into a recession amid the coronavirus pandemic.
Note: The longest expansion, from June 2009 to July 2019, is still occurring, and may be adjusted at a later date.

Understanding Recessions
Since the Industrial Revolution, the long-term macroeconomic trend in most countries has been economic growth. Along with this long-term growth, however, have been short-term fluctuations when major macroeconomic indicators have shown slowdowns or even outright declining performance, over time frames of six months up to several years, before returning to their long-term growth trend. These short-term declines are known as recessions.

Economic Expansions by Duration
Economic expansions begin at the trough of a business cycle - its lowest point - and end at its peak, after which the economy begins to contract, kicking off an economic recession.

     **From      To     Months**
 1  Jun, 2009  Jul, 2019     121
 2  Mar, 1991  Mar, 2001     120
 3  Feb, 1961  Dec, 1969     106
 4  Nov, 1982  Jul, 1990      92
 5  Nov, 2001  Dec, 2007      73
 6  Mar, 1975  Jan, 1980      58
 7  Oct, 1949  Jul, 1953      45
 8  May, 1954  Aug, 1957      39
 9  Oct, 1945  Nov, 1948      37
10  Nov, 1970  Nov, 1973      36
11  Apr, 1958  Apr, 1960      24
12  Jul, 1980  Jul, 1981      12



Recessions and Depressions

Economists say there have been 33 recessions in the United States since 1854 through to now in total. Since 1980, there have been four such periods of negative economic growth that were considered recessions. Well known examples of recessions include the global recession in the wake of the 2008 financial crisis and the Great Depression of the 1930s.

A depression is a deep and long-lasting recession. While no specific criteria exist to declare a depression, unique features of the Great Depression included a GDP decline in excess of 10% and an unemployment rate that briefly touched 25%. Simply, a depression is a severe decline that lasts for many years.

Recession Definition (investopedia.com)

Recession Predictors and Indicators
There is no single way to predict how and when a recession will occur. Aside from two consecutive quarters of GDP decline, economists assess several metrics to determine whether a recession is imminent or already taking place. According to many economists, there are some generally accepted predictors that when they occur together may point to a possible recession.

First, are leading indicators that historically show changes in their trends and growth rates before corresponding shifts in macroeconomic trends. These include the ISM Purchasing Managers Index, the Conference Board Leading Economic Index, the OECD Composite Leading Indicator, and the Treasury yield curve. These are critically important to investors and business decision makers because they can give advance warning of a recession. Second, are officially published data series from various government agencies that represent key sectors of the economy, such as housing starts and capital goods new orders data published by the U.S. Census. Changes in these data may slightly lead or move simultaneously with the onset of recession, in part because they are used to calculate the components of GDP, which will ultimately be used to to define when a recession begins. Last are lagging indicators that can be used to confirm an economy’s shift into recession after it has begun, such as a rise in unemployment rates.


Understanding Recessions

A recession is when you loose your job. A depression is when I loose my job.

JLC - can’t recall where I read that many years ago.



A recession is when your neighbor loses his job.
A depression is when you lose your job.
A panic is when your wife loses her job.