Recession Dating Done Right

Despite all the disappointment expressed today by the bullish traditional media over the NBER announcement to postpone the decision to declare the trough month (i.e. the end) of the Great Recession, the NBER Business Cycle Dating Committee made the correct choice to wait for the data to settle.

Given such phenomenally weak trends and the recent and ongoing end of many major government stimulus efforts it would have been premature to call the end of the recession.

Further, in the last few months we have seen the most significant leading force of weakness, home prices, fall from the artificially propped levels of mid-2009 back down the lows (below the lows for many markets) seen in 2009 leading to additional stress for the household sector and a significant surge in foreclosure activity.

Even further still, the employment situation continues to be exceptionally weak with a third of all states showing double-digit unemployment rates and at least 5 states showing continuously increasing double-digit unemployment rates.