Understanding the Recession that started in December 2007

On December 1, 2008, the NBER announced that a recession in the US started in December 2007 (for more about how the NBER came to this conclusion, see here; for the NBER announcement, see here). [Note that after this article was initially posted, the data have been updated and the table includes updates; see below for details.]

The NBER described the five monthly series which they have followed, (1) payroll employment, (2) real personal income less transfer payments, (3) real manufacturing and wholesale-retail trade sales, (4) industrial production, and (5) employment estimates based on the household survey.  This last measure is not included in their prior research, but generally is similar to the payroll employment number.

Here are these data expressed as a percentage of December 2007 values, the date that the NBER denoted the peak of the previous business cycle.

Date Payroll Emp Real P I Ind Prod Sales HH Emp
September 2007 99.6 100.4 99.6 100.2 99.9
October 2007 99.8 100.4 99.1 100.6 99.7
November 2007 99.9 100.2 99.7 100.7 100.3
December 2007 (NBER PEAK)
100.0 100.0 100.0 100.0 100.0
January 2008 99.9 99.6 99.9 100.5 100.0
February 2008 99.8 99.3 99.6 98.8 99.9
March 2008 99.8 99.0 99.3 99.0 99.8
April 2008 99.6 98.8 98.8 100.0 100.0
May 2008 99.5 98.5 98.5 99.3 99.8
June 2008 99.4 98.0 98.2 99.3 99.6
July 2008 99.3 97.7 98,2 98.2 99.5
August 2008 99.2 98.0 97.2 96.7 99.3
September 2008 99.0 97.8 93.2 94.2 99.1
October 2008 98.7 97.9 94.5 93.4 98.9
November 2008 98.3 98.6 93.2 92.0 98.5
December 2008 97.8 98.6 91.1 91.4 98.0
January 2009 97.2 96.4 89.1 90.0 97.1
February 2009 96.7 95.0 88.3 90.2 96.9
March 2009 96.3 94.2 86.9 89.2 96.3
April 2009 95.9 94.5 86.5 88.6 96.4
May 2009 95.7 94.5 85.5 88.0 96.1
June 2009 95.3 94.0 85.2 87.6 95.8
July 2009 95.1 94.2 86.1 88.6 95.7
August 2009 95.0 94.1 87.3 88.3 95.5
September 2009 94.9 94.1 87.7 88.5 94.9
October 2009 94.8 94.1 87.7 88.9 94.5
November 2009 94.8 94.3 88.4 NA 94.7

Source: Department of Commerce, Bureau of Labor Statistics, Federal Reserve Board and author’s calculations; all data expressed as percentage of December 2007 values.


The NBER defines a recession as a significant decline in economic activity spread across the economy, lasting more than a few months, and these data indicate the economy is in recession.  All five indicators have been in decline for more than a few months, with their peaks coming between September 2007 (real Personal Income) and April 2008 (household employment).

Now that we know that a recession has started, the question is when the recession will end.  I will continue to update this table with current data; as of the most recent data (November 2008), the recession continues.

[Update Dec 25 2008] Just before Christmas, the BEA released November personal income data that were up sharply (largely due to the drop in prices) almost to the level at the start of the recession; October sales data were also up.  But personal income also remained stronger than the other economic measures during the 2001 recession and sales remain well below the peak level.

[Update Jan 11 2009] Employment data are still very weak; a benchmark revision to the household employment number is now presenting a similar picture to the payroll data.

[Update Feb 1 2009] Sales and Industrial production continue to fall; personal income is steady, not much below the level at the start of the recession, but this measure did not track other variables during the 2001 recession either.  One wonders why the NBER still include personal income in their analysis.

[Update Feb 12 2009] Employment continued to fall in January; further, a benchmark revision of the payroll employment data make the payroll job loss steeper than it had been.  The BLS does not revise the previous household numbers, but the sharp drop in the household number between December 2008 and January 2009 is in part due to the revision (see here for more).

[Update Feb 19 2009] Industrial production continues to decline.

[Update March 2 2009] PI was revised higher but the latest numbers are down; sales continue to decline.

[Update March 8 2009] Continued weak employment numbers with a slight downward revision for the payroll data.

[Update March 16 2009] Continuing weak industrial production with a slight downward revision.

[Update April 1 2009] Continuing weak personal income and sales data.

{Update April 3 2009] Continuing weak jobs data

[Update April 16 2009] Annual revision of industrial production is mostly negative; IP is revised down for most of the last 18 months and now has a peak coincident with the recession.

[Update May 4 2009] Personal income continues to decline; real sales had a modest rise in February but remains at a low level.

[Update May 8 2009] Payroll employment continues to decline but household employment turns up slightly.

[Update May 15 2009] Continuing weakness in industrial production.

[Update June 7 2009] Little sign of any improvement; perhaps the rate of decrease is slowing, but no evidence of improvement in sales or employment.  Personal income is up a bit, but largely due to increased  payments by the government.

[Update June 16 2009] Continuing weakness in industrial production

[Update June 30 2009] Personal income remains weak; the increase in the headline number was caused by the increase in transfer payments which the NBER number subtract from the total.  Sales are also weak.

[Update July 2 2009] Another weak employment report, with both household and payroll numbers weaker.

[Update August 4 2009] Personal income numbers have been revised greatly changing the behavior of this series see here for details.  Revisions were largely negative.  IP is still weak; sales data will be revised in the next few days.

[Update August 14 2009] The sales data have been completely revised showing a modestly more serious decline during the recession period.

[Update August 28 2009] Both Industrial Production and Personal income are up in July (positive data will be indicated in bold); this is perhaps a preliminary indication of the end of the recession.  The NBER will wait to make a declaration that the recession is over until the evidence is much clearer.  Sales data were weaker in June.

[Update September 4 2009] Employment continued to decline in August at a slower rate.

[Update October 12 2009] BEA now calculates Personal Income minus Transfers and I am using their series that is very similar to the series I calculated; modestly down in August.  Household employment dropped sharply in September and is now just about where payroll employment is.  Industrial production was up again in August (indicative of the end of the recession).  Sales were up in August, another indicator that the recession may have ended this summer.

[Update December 29 2009] Personal Income, Industrial Production and Sales are all modestly up from their early summer minima.  The drop in payroll employment is close to zero, and household employment turned up in November.  All evidence seems to confirm that the recession ended in the summer of 2009, but the NBER is unlikely to declare an end until there has been a substantial increase in employment.

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