In his latest weekly note, titled “Not Yet Out Of The Woods” John Hussman discusses the NBER’s recent declaration that the recession ended in June 2009. Unlike others he doesn’t have any reason to criticise this call, but he does think the NBER may have to call a new recession imminently.
He walks through some of his reasoning:
In its release, the Committee noted that it “places particular emphasis on measures that refer to the total economy rather than to particular sectors.” These include “a measure of monthly GDP that has been developed by the private forecasting firm Macroeconomic Advisers,” and “measures of monthly GDP and GDI that have been developed by two members of the committee in independent research (James Stock and Mark Watson).”
The Committee generously provides downloadable data on these measures, which make for fascinating research. In particular, a review of that data suggests that the NBER may have to deal with the prospect of a “future downturn of the economy” much sooner than any of us would like.
Below, I’ve plotted the smoothed quarterly and 6-month growth rates of the Stock and Watson monthly GDP measure cited by the Committee, following the method of Zarnowitz and Moore (see last week’s update). The data is through June 2010. Note that the plunge in the smoothed growth rates occurred because even though GDP growth was positive for the second quarter, there was a sharp downturn in the monthly figures, which a variety of indicators also picked up (such as the ECRI Weekly Leading Index), and has unfortunately continued into the present quarter.
Though the Stock and Watson data has a longer history, the same downturn can be observed in the Macroeconomic Advisors data.