Recession (e.g. We're Not in One)

Recession... what does that mean? According to Wikipedia it means:

...a recession is a decline in a country's real gross domestic product (GDP), or negative real economic growth, for two or more successive quarters of a year.

Wikipedia further references the National Bureau of Economic Research's Recession Dating Procedure:

A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough. Between trough and peak, the economy is in an expansion. Expansion is the normal state of the economy; most recessions are brief and they have been rare in recent decades.

Hmmm... How does an amateur economist measure this? I'm going to pick GDP for starters, because that's easier to find. I like the NBER's definition, though, as it clarifies "real economic growth" into the specifics of income, employment, production, and retail.

The US Bureau of Economic Analysis publishes a bunch of statistics about the GDP, so I'm going to start there. Since the NBER dates the end of the last recession in November of 2001, I'm going to start with the quarterly GDP from Q42001 to present to see how our economy is really doing. I've prepared a chart with the BEA's data that shows the percentage change in US GDP, adjusted for inflation.

Notice how the chart never dips below zero? That means we haven't even had a quarter where the GDP didn't grow, let alone two of them in a row. That doesn't mean that growth isn't low, just not negative. The GDP in the 4th quarter of 2007 only grew 0.6%. Such swings are necessary to a healthy economy, though... look at what happened in 2003 after the GDP growth dipped lower than what we just had (0.2%).

The BEA is full of useful data, but it looks like it takes awhile to compile, so I'm not sure how real-time you can get with it. I'm going to have to start paying attention to where the news get their information... it looks like they'd be reporting on past events if they are taking this data when it is released -- the 4Q2007 results were reported almost a whole quarter after it ended, on March 27th.

This data is adjusted for inflation, and I wonder now how this would look compared to what actions the Fed takes with monetary policy. Perhaps I'll dig into that and tackle that next.