Prompt Cast
How the National Bureau of Economic Research Determines Recessions
TLDR The National Bureau of Economic Research's Business Cycle Dating Committee uses a combination of automatic rules and human judgment to determine recessions, analyzing economic indicators like personal income, employment, and consumption. Former members argue that a human committee is better than a mechanical rule due to the complexity of relying solely on GDP data.
Timestamped Summary
00:00
The National Bureau of Economic Research's Business Cycle Dating Committee determines if the country is in a recession based on economic indicators.
03:37
The National Bureau of Economic Research's Business Cycle Dating Committee uses a combination of automatic rules and human judgment to determine recessions, not making real-time calls but focusing on past data.
06:47
Former members of the National Bureau of Economic Research's Business Cycle Dating Committee, like Ben Friedman, argue that a human committee is better than a mechanical rule for determining recessions due to the complexity and potential inaccuracies of relying solely on GDP data.
10:16
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13:23
The Business Cycle Dating Committee determines recessions based on the three D's of doom: depth, diffusion, and duration, analyzing various economic indicators like personal income, employment, and consumption.
16:46
Determining the exact start of a recession can be subjective due to differences in using monthly versus quarterly economic data, leading to potential drama in the business cycle dating process.
20:12
The U.S. economy's sharp decline in early 2020, coupled with widespread impact, led to the NBER quickly declaring the pandemic downturn as a recession, despite debates on the relevance of their decisions in today's data-rich economic landscape.
