Uh-Oh! Now It Does Look a Lot Like a Recession...
How deep a recession remains an open question...
Jim Hamilton has some interesting thoughts on business-cycle asymmetry:
Econbrowser: Is this a recession and do we care?: [T]here are a number of economic models quite popular among academics today that... presuppose linear dynamic systems in which a "recession" is indeed just an arbitrary definition you would make up to characterize a string of bad luck.... I argued [instead] that recessions represent distinct and objectively identifiable episodes in which the usual dynamic factors that drive economic growth--technological progress, population growth, and capital accumulation--are replaced by a distinctly different dynamic in which lost income in some sectors feeds back into declines in output for others. One of the defining characteristics of this phenomenon is the rapid rise in the unemployment rate that we've seen in every historical recession. It's very difficult to generate that kind of pattern from a system governed solely by linear dynamics, or interpret it from a perspective in which there's nothing special going on during a true economic recession....
I was therefore quite alarmed by the 5.5% unemployment rate reported yesterday... the increase last month is the biggest monthly change that we've observed in over 20 years.... I personally share the more pessimistic interpretations of Jared Bernstein, Calculated Risk, Michael Mandel, and Mark Thoma; (you can find other interesting discussion from Phil Izzo, Barry Ritholtz, Andrew Samwick, and Angry Bear).... [W]e've now seen 5 consecutive months in declining nonfarm employment as estimated from the BLS establishment survey, putting the overall level essentially back to where it was a year ago. Year-on-year employment stagnation is another thing we just don't see outside of an economic recession.
