Recessions Are Characterized by the Breadth
of Contractions in Activity
In a “big data” exercise on Liberty Street Economics, economists Crump, Giannone, and Lucca determine turning points in overall U.S. economic activity by aggregating information from turning points in individual data series for many macroeconomic variables. Clusters of turning points signal a turning point in the broader U.S. economy. For example, in the 2008-09 recession, almost every series was simultaneously in contraction, producing a vertical red stripe in the plot.
Source: Federal Reserve Bank of St. Louis (FRED-MD).
Notes: This chart plots the cross-section and time series of turning points in a monthly data set of U.S. economic series maintained by the Federal Reserve Bank of St. Louis. The top panel shows the percentage of series (blue line) judged to be in contraction by the Bry-Boschan (BB) dating algorithm. The gold line shows the percentage of series judged to be in contraction using real-time data. The vertical dark gray lines indicate the dates of NBER announcements of peaks in economic activity. The bottom panel provides a heatmap, showing the periods for which each series is judged to be in expansion (white) or contraction (red) based on the BB algorithm. Gray-shaded regions indicate periods designated as in recession by the National Bureau of Economic Research (NBER).