Section I discusses some of the measurement issues involved in identifying regional
recessions compared with national
recessions.
9) Our national coincident index, which was created at the same time as the state indexes for comparison purposes, is relatively well behaved, capturing all five NBER
recessions as uninterrupted declines in activity, interspersed with uninterrupted increases in activity, or expansions (Figure 1).
To begin, we rely on the time-honored and standard academic definition of a
recession as a decrease of real gross domestic product (GDP) for at least two consecutive quarters.
Figure 1 shows the relationship between the decline in GDP and employment for all 11
recessions.
Stovall also notes that since 1960, seven of the last eight
recessions were preceded by a 30% year-over-year decline in housing starts.
As with most
recessions, there is usually a gap between the trigger and the two consecutive quarters of negative economic growth that is the definition of a
recession.
The global financial crisis of 200809 contributed to national
recessions of varying severity.
The Great
Recession was significantly associated with a lower incidence of health care utilization (Lusardi, Schneider, and Tufano 2010; Dorn et al.
Part of our interest is determining whether Okun's law changes during
recessions.
However, the signs of
recession are still inconclusive, according to QNB Capital.
US jobs still haven't returned after over the 37 months since the
recession first started, according to report from DoubleLine Capital.
Keywords: forecasting,
recessions, leading indicators, Markov switching, business cycles
