The year on year rate of change of the official civilian unemployment rate is the measure, and when this passes 15, then every time it has done this USA has been declared in a recession at a latter point in time (see 3rd panel)

Recessionconfirmed

Chart via iTulip

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Legend: Shaded area are recessions

1st Panel – USA GDP and USA GDP without exports
2nd Panel – Civilian unemployment rate
3rd Panel – Rate of change of series in 2nd panel

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See also:
Estimating Probabilities of Recession in Real Time Using GDP and GDI
Jeremy J. Nalewaik
Finance and Economics Discussion Series, Federal Reserve December 19, 2006   
http://www.federalreserve.gov/pubs/feds/2007/200707/index.html

Category: Data Analysis, Economy, Employment

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

7 Responses to “Civilian Unemployment & Recessions”

  1. leftback says:

    That income number was a shocker this morning, eh Barry? That was actually worse than the more bearish predictions.

    We are probably seeing a confluence of rising unemployment and a decrease in hours worked among those employed, something not as obvious but that you can see going on around us.

    Fannie and Freddie common not looking like the bargain of the century today, I see….

  2. mickslam says:

    Alright Barry – We get it!!!!

    You think we are in a recession!! jeeze…

    But you do have to say it over and over, as there is a substantial crowd out there that thinks we are growing at like 3.2% or something crazy.

    I would like this chart better if they used U-9 but thats a quibble not a criticism.

    The more important question now “is when does it end?”

  3. philipat says:

    Excuse me if I am wrong but doesn’t the third graph suggest that when the rate of change goes over 15 this is coincident with the END of a recession?

  4. Steve C says:

    Very nice work Barry. When does it become profitable to start buying stocks when a recession is looming? Since the stock market is, theoretically, always six months ahead, should we start buying stocks now in preparation for the recovery?

  5. JimmyY says:

    Hi Barry.

    Have you noticed….

    Per U.S. DoL’s 8/21 initial claims release:

    “States reported 1,284,252 persons claiming EUC (Emergency Unemployment Compensation) benefits for the week ending Aug. 2, an increase of 570,284 from the prior week.”

    I looked at initial claims news releases prior to 8/21 and could NOT find any reference to the “570k prior week” statistic.

    The 8/28 initial claims are not better:

    “States reported 980,695 persons claiming EUC (Emergency Unemployment Compensation) benefits for the week ending Aug. 9, a decrease of 313,633 from the prior week.”

    Unfortunately, the 8/21 EUC numbers were revised +10k within the 8/28 report.

    More analysis from Mike Donnelly:

    http://pbp.typepad.com/economy/2008/08/15-million-more-at-the-unemployment-office.html

    Looks like the employment picture (or lack thereof) seems very ominous.

  6. icm63 says:

    WARNING. FDIC survey of Lending standards tightening, and inflation have a high correlation with how bad unemployment can get. At the moment both tight lending standards and inflation are higher than 1991/2001 so unemployment rate peaking at above 7.5% is a very big possibility. Its not un american to be a boy scout and be prepared, (I am not american), so good luck.

  7. Bruce says:

    Britain Faces Worst Economic Crisis in 60 Years…

    http://news.bbc.co.uk/2/hi/business/7589291.stm

    By none other than Alistar Darling…

    I can still wait awhile before I send Mr. Washington and Mr. Lincoln back to work for me in this market…

    Bruce in Tennessee