Research, regulation, industry reports

Is this a recession? It quacks like one, says new Fed paper

Daniel Ray

Are we in a recession or not? Today’s economic conditions sure look like the past six recessions, says a new working paper released today by a research analyst with the Philadelphia Federal Reserve Bank.

The agency that officially “calls” a recession is the National Bureau of Economic Research, a Cambridge, Mass.-based group that bills itself as “the nation’s leading nonprofit economic research organization.” You won’t get an argument from me on that point: 16 of the 31 American Nobel Prize winners in economics and six of the past chairmen of the president’s Council of Economic Advisers have been researchers at the NBER.

nonfarm_payroll.gifGood research takes time, as the reporters here always remind me, and the NBER is thorough but slow in calling a recession, waiting until well past a recession’s peak before labeling it as one.

Those of us who are impatient were done a favor by the new paper from Philly Fed research analyst Calvin Price, who decided to compare how the economy looks today with how it looked during previous recessions called by the NBER. That makes sense: If recessions were ducks, and you want to see if today’s economy is a duck, you’d compare it to previous recessions’ waddles and quacks.

Comparisons have been made before, but Price points out that previous comparison studies have used revised data. Economic data are frequently revised as additional information comes in. Price’s paper instead looks at the data that were available at the time, not the revised data, and compares today’s unrevised data to the unrevised data available to the NBER during previous recessions. In other words, an apples to apples (ducks to ducks) comparison.

“Most of my time is spent working with real-time data, and the current widespread interest about the possibility of recession has caught the attention of some of my colleagues, who suggested I look into the idea,” Price told me in an e-mail.

His report’s conclusion: “Comparing data on the current period with data available at the time the NBER made recession calls, we find that the growth rates of industrial production and payroll employment since December 2007 are comparable to growth rates seen at the start of the past six recessions.”

Translation: It sure quacks like one. There was one exception, where this time period doesn’t look like past recessions: Personal income growth has been somewhat stronger.

See related: Recession-proof your credit and finances, Poll: Half of America won’t spend “stimulus” rebate


The Carnival of Personal Finance was kind enough to include one of my blog items in its 158th edition, the Buffy the Vampire Slayer-themed Carnival of Personal Finance #158. My contribution was Obama may reform McCain’s credit card rate.

Join the Discussion

We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, we ask that you do not disclose confidential or personal information such as your bank account numbers, social security numbers, etc. Keep in mind that anything you post may be disclosed, published, transmitted or reused.

The editorial content on is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company's business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.