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The committee has determined that a trough in monthly economic activity occurred in the US economy in April The peak in economic activity occurred in February The recession lasted two months, which makes it the shortest US recession on record. The NBER chronology does not identify the precise moment that the economy entered a recession or expansion.
Because the most recent trough was in Aprilthe last month of the recession was Apriland May was the first month of the subsequent expansion. In determining that a trough occurred in Aprilthe committee did not conclude that the economy has returned to operating at normal capacity. An expansion is a period of rising economic activity spread across the economy, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. Economic activity is typically below normal in the early stages of an expansion, and it sometimes remains so well into the expansion.
The committee decided that any future downturn of the economy would be a new recession and not a continuation of the recession associated with the February peak. The basis for this decision was the length and strength of the recovery to date. In determining the date of a monthly peak or trough, the committee considers a of indicators of employment and production.
In the current case, all of those indicators point clearly to April as the month of the trough. On the employment side, the committee normally views the payroll employment measure produced by the Bureau of Labor Statistics BLSwhich is based on a large survey of employers, as the most reliable comprehensive estimate of employment.
This series reached a clear trough in April before rebounding strongly the next few months and then settling into a more gradual rise. However, the committee recognized that this survey was affected by special circumstances associated with the COVID pandemic in 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 National bureau of economic research business cycle dating committee the pandemic, thus resulted in an overcount of people working. Accordingly, the committee also considered the employment measure from the BLS household survey, which excludes individuals who are paid but on furlough. This series also shows a clear trough in April. The committee concluded that both employment series were thus consistent with a business cycle trough in April. Both series attempt to measure the same underlying concept, but GDP does so using data on expenditure while GDI does so using data on income.
These measures estimate production that occurred over an entire quarter and are not available monthly. The most comprehensive income-based monthly measure of aggregate production 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 reached a clear trough in April The most comprehensive expenditure-based monthly measure of aggregate production is monthly real personal consumption expenditures PCEpublished by the BEA.
This series also reached a clear trough in April In determining the date of a quarterly peak or trough, the committee relies on real GDP and real GDI as published by the BEA, and on quarterly averages of key monthly indicators. As with the monthly trough, there is strong agreement across the indicators about the timing of the quarterly trough: the indicators all point strongly to Q2. Quarterly real GDP and real GDI both reached clear troughs in Q2, as did quarterly averages of both the monthly payroll and household employment series.
For example, the shortest recession occurred in the first half of and lasted six 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 recent downturn had different characteristics and dynamics than prior recessions. Nonetheless, the committee concluded that the unprecedented magnitude of the decline in employment and production, and its broad reach across the entire economy, warranted the deation of this episode as a recession, even though the downturn was briefer than earlier contractions.
NBER periodicals, and newsletters are not copyrighted and may be reproduced freely with appropriate attribution. Share Twitter LinkedIn. Published July 19, The Month of the Trough In determining the date of a monthly peak or trough, the committee considers a of indicators of employment and production. 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 dependsNational bureau of economic research business cycle dating committee
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Reference date (United States business cycles)