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The worst US recession since the 1930s is technically over. However, it is difficult to determine the exact date of the end of the recession as economic indicators are mixed with personal income and employment data still weak. The Globicus coincident index, while indicating the recession ended in June or August, has still not bottomed in a clear way. When the Business Cycle Dating Committee of the National Bureau of Economic Research declares the end of the recession possibly early next year, the indicators below are considered: 

Personal income less transfer payments peaked in October 2007. It was down 0.3% m/m in September 2009 and 7.7% lower than its peak, indicating continued weakness in the economy.     

After peaking in January 2008, total industrial production dropped sharply. However, it later turned around and rose for a third consecutive month in September, indicating the manufacturing sector is expanding.

Manufacturing and trade sales peaked in November 2007. After a sharp decline, this indicator seemed to bottom with a low set in June. Sales advanced 0.9% m/m in September, gaining for a second month since July.         

After peaking in December 2007 at 138.2 million, US nonfarm payrolls have shown sharp job losses. Employment fell 190K to 130.8 million in October, a drop of 7.4 million jobs since December 2007. Job losses peaked at 741K in January 2009. This indicator has been slow to recover in the last two recessions and will likely remain negative for several quarters after the end of this recession.  

After bottoming in March 2007, the unemployment rate has been rising. As an indicator, the unemployment rate has historically lagged the end of recessions. In the last two recessions, unemployment peaked 4-6 quarters after the declared end of the recessions.     

GDP expanded at a 3.5% annualized rate in Q3 2009, the first expansion in more than a year and technically marking an end of the recession, after a -0.7% annualized pace in Q2, according to the first Q3 GDP estimate from the Commerce Department.       

Both the Conference Board and Globicus/qEcon Research US coincident indexes reached their lows in June. Historically a trough in these indexes indicates the end of the recession. Still, the coincident indexes have remained near their lows and have not bottomed in a clear way. Furthermore, government revisions may change the indicators. The Dating Committee will not declare the recession over until they see the revised numbers.     

Although the recession probably ended last summer, the overall trough, based on economic data through September 2009, cannot be determined with a high degree of certainty until the employment picture improves a bit more.    

Hans Nilsson

November 15, 2009