Week 01 Discussion - When does a recession begin and when does it end?The dating of a business cycle...

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Week 01 Discussion - When does a recession begin and when does it end?The dating of a business cycle is done by the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER). Go to NBER’s web site and read the Nov. 26, 2001 memo as well as the set of FAQs. Summarize in your own words the economic indicators that the committee tracks to be able to determine the beginning and the end of a recession. Now, go to the Federal Reserve Bank of Dallas site (www.dallasfed.org). Click on the tab Economic Data and then click on U.S. Economic data and finally on National Income and Product accounts to retrieve the most recent data on U.S. GDP. In view of the data from 2007 to the most recent data of 2009, will you argue that the recession has ended? You can consult other data on the Dallas FRB site as well as other memos and announcement on the NBER site.
	
Document Preview: Week 01 Discussion - When does a recession begin and when does it end?The dating of a business cycle is done by the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER).  Go to NBER’s web site and read the Nov. 26, 2001 memo as well as the set of FAQs.  Summarize in your own words the economic indicators that the committee tracks to be able to determine the beginning and the end of a recession.  Now, go to the Federal Reserve Bank of Dallas site ( HYPERLINK "http://www.dallasfed.org" www.dallasfed.org).  Click on the tab Economic Data and then click on U.S. Economic data and finally on National Income and Product accounts to retrieve the most recent data on U.S. GDP.  In view of the data from 2007 to the most recent data of 2009, will you argue that the recession has ended?  You can consult other data on the Dallas FRB site as well as other memos and announcement on the NBER site.

Robert · Accepted Answer

Economic Indicators for Determining the beginning and the end of the recession as used by 
NBER   
Solution: The National Bureau of Economic Research uses four economic indicators to be able to 
determine the beginning and the end of the recession: 
1. Employment in the entire economy (monthly indicator) 
2. Personal Income less transfer payments ( monthly indicator) in real terms adjusted for 
price changes 
3. The volume of sales of the manufacturing and trade sectors stated in real terms, adjusted 
for price changes 
4. Industrial production 
The NBER maintain a monthly chronology. That is why it used the monthly indicators for 
determining the recession.  
A major indicator of economic activity i.e. GDP is not included here. Generally people say that a 
two quarter decline in GDP is a recession. But the reason given by NBER is that GDP is 
measured quarterly and it is subject to continuing, large revisions. 
NBER defines recession as “ recession is a significant decline in economic activity spread across the 
economy, lasting more than a few months, normally visible in real GDP, real income, employment, 
industrial production, and wholesale-retail sales.” 
Out of the four indicators employed by the NBER they consider the employment as the best 
indicator for deterring the beginning and the end of the recession.

Week 01 Discussion - When does a recession begin and when does it end? The dating of a business cycle is done by the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER)....

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