From Robert Hall at Stanford, also member of NBER recession dating committee (source: Bloomberg):
The improving labor market indicates the deepest U.S. recession since the 1930s may have ended, though it is too soon to say precisely what month it stopped, said the head of the group charged with making the call.
Payrolls fell by 11,000 workers in November, less than the most optimistic forecast among economists surveyed by Bloomberg, figures from the Labor Department showed today in Washington. The jobless rate declined to 10 percent.
“Today’s report makes it seem that the trough in employment will be around this month,” Robert Hall, who heads the National Bureau of Economic Research‘s Business Cycle Dating Committee, said in an interview. “The trough in output was probably some time in the summer. The committee will need to balance the midyear date for output against the end-of-year date for employment.”
Among the top indicators the group uses is payrolls, according to its Web site. In the third quarter, the economy expanded at a 2.8 percent annual pace after a yearlong contraction.
Choosing between the dates “will take some time,” Hall said. “We act deliberately.”
Harvard University professor Jeffrey Frankel, another member of the committee, said the most likely date for the recession’s end would be midyear.
“Mid-summer remains the best candidate for ultimate dating of the trough, probably July, or possibly June,” he said.
The recession began in December 2007, the group said in December 2008. It usually takes six to 18 months to confirm a contraction’s start or finish, according to the panel.
Declaring the 2001 downturn over was complicated by continuing job losses. The group took until July 2003 to say that the slump had ended, 20 months after the fact.
Hall said he couldn’t rule out a further decline in the economy that would make it harder to date the end of the recession.
The estimates for the low points in unemployment and output “presume that there won’t be any new adverse shock,” Hall said. “There are some horror-story scenarios that could stand in the way, so I don’t see the point of forecasting. We just wait until we are ready.”
Frankel said a second leg down for the economy would pose other difficulties for the committee.
“In the hypothetical event that the economy were to tank again in early 2010, would we call that a new recession or part of the same recession?” he said. “Probably the latter. Until we can answer that question the other way, we won’t call the trough. So it will be awhile longer.”