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InvisibleBlack -> RE: Economic dependents increasing. (4/12/2010 6:29:05 PM)
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quote:
ORIGINAL: Silence8
Who drew the line, again? No, seriously, I don't remember. (I really don't remember.) [:D]
The "two months of positive growth" is sort of a rule of thumb. Officially in the United States the National Bureau for Economic Research determines the start and stop of recessions. I'm sure somewhere on their site they explain their method in exacting mathematical detail, but as I recall, it's a blending of five economic indicators:
- payroll employment
- real manufacturing
- wholesale-retail sales
- the Fed's index of industrial production
- real personal income
Based on when they view a majority of these indicators have turned positive or negative, they then "call" the start of an upswing or a downswing. You have to bear in mind that the NBER is not forward-looking - they don't predict anything. They look backwards and judge based on statistics - and they typically wait several months, so that the data can be adjusted since quite often statistics are revised as the initial estimates are wrong - so usually about a quarter after the recession starts or stops the NBER will say something.
Also, I have to say, a number of economists have been somewhat skeptical of the numbers the NBER has been using in the past couple of years - so they may join the long list of agencies and organizations whose data is no longer viewed as objectively valid.
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