How does the NBER determine business cycle turning points?
Recessions are periods when the economy is shrinking or contracting.
A monthly indicator that moves with the economy The National Bureau of Economic Research (NBER) has designated nine business cycles over the years from 1945 to 1991.
During this period, the average business cycle lasted about five years; the average expansion had a duration of a little over four years, while the average recession lasted just under one year.
The chart shows the periods of expansion and recession for the Composite Coincident Indicator Index from 1959 to 2002.
This index, published by The Conference Board ( moves very closely in line with current economic conditions.
The chart plots the behavior of the Composite Coincident Indicator Index from 1959 to 2002.
Note that the series typically climbs during expansion periods (between the trough and the peak of the business cycle) and falls during recessions (the shaded areas between the peak and the trough).
(NBER), which looks at various coincident indicators such as real GDP, real personal income, employment, and sales to make informative judgments on when to set the historical dates of the peaks and troughs of past business cycles.
The NBER was founded in 1920, and the first business cycle dates published in 1929.