Magazine article Economic Trends

Recession Recovery Indicators

Magazine article Economic Trends

Recession Recovery Indicators

Article excerpt

The National Bureau of Economic Research defines a recession as a period of significant decline in total output, income, employment, and trade, usually lasting six months to one year and marked by widespread contractions in many economic sectors. The NBER, which dates both the beginning and the end of these events, has not officially announced the end of the current recession, which began in March 2001. Many, however, have put it as early as December 2001.

If December was indeed the end, do post-recession changes in the labor market resemble those that followed other recent recessions? For 12 months after four of the recessions since 1970, the unemployment rate declined; for 12 months after the 1990-91 recession, the rate rose. During the five months of data recorded since December 2001, the unemployment rate has risen; in fact, the percent increase was larger than in any comparable post-recession period since 1970.

The decline in employment from December 2001 to April 2002 resembles the five months following the 1990-91 recession. All four of the recessions previous to that showed employment increases five months after.

Recent employment gains in help supply services, though large, have been smaller than in the five months after the 1981-82 episode. Typically, employment in this sector drops throughout a recession and starts increasing again right after it ends. The gain in the five months after the 1990-91 recession, however, was very modest.

With such conflicting signals, it may be too early to call the latest recession a thing of the past. …

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