NBER
When it comes to dating US recessions, the National Bureau of Economic Research wears the crown. They are the ones who literally state there has been a recession.
Current Status
No Recession
No recession declared by NBER. All recent observations show expansion.
What NBER Monitors
NBER scrutinise a variety of monthly data, including:
- Real retail sales
- Industrial production
- Real manufacturing sales (wholesale)
- Non-farm payrolls
- Household employment
- Real Personal Consumption Expenditures (PCE)
- Real income
These seven indicators give them a view of the overall health of the economy. An increase in these metrics shows robustness and growth. The opposite is true for decline.
The Sequence
NBER's analysis begins with contraction in real retail sales as an early indicator of shifting economic winds. When consumers reduce spending, industrial production typically follows suit, creating downstream effects on wholesale markets and employment.
The sequence unfolds: declining demand leads to reduced industrial output, which leads to decreased manufacturing sales, then workforce reductions, lower household employment, reduced consumer spending, and diminished real income.
These indicators are not strictly sequential. During actual recessions, multiple metrics may decline simultaneously.
Important Caveat
NBER has historically only officially declared recession starts after they've concluded. This is a lagging methodology. It confirms what has already happened rather than predicting what will happen. That's why we track leading indicators alongside NBER.
Data Source
FRED series: USREC (1 = recession, 0 = expansion). Updated monthly, but always retrospectively.
Credit
The National Bureau of Economic Research is a private organisation responsible for identifying and dating US economic cycles.