A Perfect Recession Indicator

Sunday, June 08, 2008 | 07:31 AM

The NYT's Floyd Norris notes that the 12-month change in private sector jobs is down 125,000 jobs from may 2007 to May 2008.

Since 1953, this indicator has a perfect record, identifying 9 out of 9 recessions. When it flips negative (year over year), the economy is already in recession each and every time:

• December 1953, the figure turned negative six months after the recession was later determined to have begun. (negative for 14 months).

• October 1957, it went negative three months after the recession began (negative  for 15 months).

• December 1960, the negative jobs figure came 9 months after the recession started (negative  for 10 months).

• July 1970, it turned negative 8 months after the recession began (negative  for 13 months).

• November 1974, the first negative number came a year into the recession. (negative for 14 months).

• June 1980, the recession was 6 months old when the negative number arrived. (negative  for just 6 months).

• January 1982, the negative number came 7 months after the recession started (negative  for 17 months).

• December 1990, the first negative number came 6 months into the recession (negative  for 17 months).

• June 2001, the recession was 4 months old. The job change number stayed negative for 30 months -- the longest streak ever.

Caveat: These numbers are based on revised, not original reported data. So if the data somehow gets revised upwards, this recession signal will go away. But I agree with Norris that revisions are much more likely to make the data more negative, not less . . .


Jimmy P, put the hallucinogens away, and fire up Amazon: my preferred version of Blade Runner is the Five-Disc Ultimate Collector's Edition . . .


Jobs Show Recession Is Here
Floyd Norris
NYT, June 6, 2008,  4:29 pm

Sunday, June 08, 2008 | 07:31 AM | Permalink | Comments (25) | TrackBack (0)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post



TrackBack URL for this entry:

Listed below are links to weblogs that reference A Perfect Recession Indicator:


Another brick pried out of the Wall of Denial -- thanks.

Why did the indicator stay negative for a record 30 months during 2001-2003? Two hypotheses: (1) There was a second dip into recession during late 2002, which lasted into early 2003. This is apparent in several data series; most importantly, in stock indexes, which anomalously bottomed nearly a year after the recession allegedly ended in late 2001, and didn't begin a sustained rally until March 2003. Such lagged stock market recovery never happened in any other recession. (2) Since the recession was tempered by asset inflation -- particularly the housing Bubble -- job growth could stay negative even as spending began to recover, thanks to the housing ATM.

In any case, it's futile to look for a bottom until the authorities capitulate. By that, I mean the president and the cabinet admitting flat out, "Yes, we're in recession." And Ben Bernanke admitting, "No, the credit crunch is not over, and I may be forced to slash rates again, though inflation will roar skyward like a Saturn V rocket." I want to see the bitter tears in their eyes on prime-time television, as these functionaries rue the day they accepted the "mission impossible" of cleaning up Greenspan's fouled nest. What did they ever do to deserve such a cruel fate?

Posted by: Jim Haygood | Jun 8, 2008 8:15:12 AM

The comments to this entry are closed.

Recent Posts

December 2008
Sun Mon Tue Wed Thu Fri Sat
  1 2 3 4 5 6
7 8 9 10 11 12 13
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31      


Complete Archives List



Category Cloud

On the Nightstand

On the Nightstand

 Subscribe in a reader

Get The Big Picture!
Enter your email address:

Read our privacy policy

Essays & Effluvia

The Apprenticed Investor

Apprenticed Investor

About Me

About Me
email me

Favorite Posts

Tools and Feeds

AddThis Social Bookmark Button

Add to Google Reader or Homepage

Subscribe to The Big Picture

Powered by FeedBurner

Add to Technorati Favorites


My Wishlist

Worth Perusing

Worth Perusing

mp3s Spinning

MP3s Spinning

My Photo



Odds & Ends

Site by Moxie Design Studios™